• by Ross Fadner , November 16, 2003

The sale of music download service MP3.com to CNET Networks by Vivendi is the latest installment in a new economy saga filled with crashing market values and shifting financial models. At its peak, MP3.com was worth $7 billion during the pre-bubble Internet stock run-up. A few years later, the music Web portal was hit with a barrage of lawsuits for illegal downloading, resulting in its takeover by one of the plaintiffs, Vivendi, for $372 million on cash and stock.

Vivendi is now unloading MP3.com to CNET for an undisclosed fee, but you can be assured the deal is for substantially less than what Vivendi bought originally bought the downloading service for. The deal is scheduled to close next month according to a statement from CNET, the San Francisco-based online technology publisher.

The deal essentially marks the end of a prominent name in online music that was synonymous with the popular digital form of downloading music files. While MP3.com will remain the portal's domain, the CNET acquisition will mark the end of the service in its current incarnation.

Fittingly, the news first broke with mp3.com users in a mass email and message posting on the website. Many of the musicians who used the site to store, distribute and market their work find themselves wondering what will happen to it because CNET is unclear about how or even if the new MP3.om site will be able to accommodate them.

The messages sent to these musicians gave users until Dec. 2 to move all stored information, as the site will be taken apart and will undergo a remodeling process in preparation for its relaunch sometime next year. The message said that, "promptly following the removal of the mp3.com web site, all content will be deleted from our servers and all previously submitted tapes, CD-ROMs and other media in our possession will be destroyed."

More than 250,000 musicians currently make their music available for download on MP3.com, according to the site, and much of it is free. The goal for these musicians is primarily to build a fan base, sell merchandise, tracks, and records, and hopefully gain the attention of record executives.

According to a CNET spokeswoman, the future for artists on the relaunched MP3.com site is uncertain. She added vaguely that "we have reached out to the artist community through email correspondence and we are looking forward to a dialogue with them about how their needs can be met." The MP3.com message board posting said, "CNET Networks Inc. plans to introduce new and enhanced artist services."

CNET plans to turn MP3.com primarily into an online music information service, said the spokeswoman. She compared the site's future incarnation to CNET's popular video game information service, GameSpot. "MP3.com is a vanguard brand that is synonymous with digital music," she stated, adding that after its makeover, it "will be the premier source of information about digital music."

Which means that while the site's future may include premium content for paying members a la GameSpot, MP3.com will not be a pay-for-music service. "We will not be competing with the music downloading services," said the spokeswoman, who was quick to add that paid online music services are fast becoming an overcrowded, competitive market, with the likes of Apple, RealNetworks, Napster, and possibly Wal-Mart vying for their share of an as-yet unproven market.