Lycos is buying Mediascience, maker of the Sonique MP3 player, for 1.1 million shares, or roughly $US35 million, the two companies confirmed yesterday.
The acquisition is Lycos' latest bid for music-hungry consumers. In February, the company launched a MP3 search engine and two months later a radio product. The Sonique software player competes directly with recent American Online. (AOL) acquisition Winamp.
Sonique, with 10 employees and less than a year of operating history, has built a substantial grassroots following of 3 million users, based in large part on the player's unique interface, which employs video-game-like graphics and resembles a 3-D spaceship.
"We haven't spent a single dime on marketing," bragged principal and cofounder Riaz Vilani.
Mediascience was reportedly in talks with Yahoo Inc. last month, according to reports that surfaced on CNET. The company became a natural acquisition target in May when AOL bought its competitor, Nullsoft Inc., which makes the popular Winamp player. The $30 million price tag for Nullsoft seemed high for the four-person, Sedona, Arizona-based operation -- but pleased Mediascience.
"They put a price on us," said an engineer, who demoed the Sonique player at Mediascience's booth during the MP3 Summit in San Diego in June. Unfortunately, he noted, many conferencegoers who dropped by the booth had never heard of the company or the product.
Now that will change.
Lycos, which has a current base of 32 million users a month, plans to link music and Sonique in the minds of its mainstream consumers -- literally.
"If 50 percent of our users are looking for music on our site, we can put the player in front of them," said Brian Kalinowski, director of Lycos' multimedia services.
Though Winamp is currently the dominant MP3 player on the market, Lycos plans to move quickly in ramping up Sonique's functionality.
Kalinowski said that within three to five weeks Lycos would introduce a new version of the player that includes Internet connectivity. Later versions will allow users to access streaming audio, chat, message boards, music info and fan pages through the player itself.
Meanwhile, AOL has yet to begin implementing any music strategy since its acquisitions of Nullsoft and radio site Spinner.com, though the online service reportedly has plans to integrate Winamp with Spinner and ICQ, the AOL-owned instant messaging application.
Lycos recently signed with DMX, a subsidiary of cable company TCI's Liberty Digital, to provide 30 new channels on its existing radio product. According to Kalinowski, Lycos will also begin offering digital downloads, putting it head to head with sites like MP3.com, Tunes.com and Rioport.com.
"Our goal has been to act as a meta-aggregator for text-based content like news," said Kalinowski. "In the near term, you'll see us become an aggregator for music."