Time Warner and the UK's EMI Group are merging to create a $20 million company that will put real clout behind music on the Internet.
The deal is built on a 50-50 joint venture, pooling the companies' recorded music and music publishing businesses.
EMI chairman Eric Nicoli said the deal "enhances our ability to realise the opportunities presented by the Net and other new media, and will allow us to deliver all of our main strategic objectives in a dramatically shorter timeframe".
The move comes on the heels of Time Warner's proposed merger with online heavyweight America Online (AOL).
Both Time Warner and EMI have been active participants in the Secure Digital Music Initiative (SDMI), which is developing standards to prevent music piracy, including music on the Net.
The proposed company - to be known as Warner EMI Music - will have some of the music industry's biggest artists on its roster, including The Beatles, The Rolling Stones, Madonna and Phil Collins.The merger plans will, however, raise questions over competition. Warner-EMI will have more than a 25 per cent share of the music publishing market in a number of countries, including the US and the UK. Regulators will also have concerns over the amount of content AOL will control if its merger with Time Warner goes through.
Analyst Forrester Research predicts that downloadable music will be a $1.1 billion industry by 2003.
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