AOL buys and Nullsoft

America Online has moved to bolster its media strategy by buying the pioneering Internet music site and Nullsoft, the developer of the popular MP3 player, WinAmp. The two companies will combine forces to head up AOL's music initiative.

As part of its rapidly expanding broadband strategy, America Online (AOL) has acquired San Francisco-based, and Sedona, Arizona-based Nullsoft for a total of US$400 million in stock transactions. is a privately held company that relies primarily on advertising and sponsorship for revenues. Its principal business is offering more than 120 channels of free music in various genres, on a version of RealNetworks' Real Player designed to look like a radio dial.

The company has also recently moved into the business of allowing Web users to build customised CDs, and has said that it plans to offer concert tour and ticket information. The company has existing partnerships with portals, including Yahoo and Snap; it is unclear how the AOL acquisition will affect such deals in the future.

Nullsoft, which creates the popular MP3 player Winamp, will move its five-employee operation to's San Francisco offices. The two companies will combine forces to head up AOL's music initiative, which CEO Dave Samuel said had been on AOL's agenda for over a month.

"We were talking about partnering within the space," said Samuel. "One thing led to the next, and we decided that a really close partnership -- a merger-acquisition -- made the most sense."

With a streaming radio product and a digital download product now firmly under its belt, AOL is well-positioned to become a major player in the online music space, which is heating up as technology players like RealNetworks and music portals like aggressively push digital delivery, and record labels like Sony gear up for a counterattack.

Samuel said that's only plan at present was to keep building its traffic, with the new reach of AOL at its disposal.

In recent weeks, investors and analysts have chided AOL for moving too slowly to assemble a broadband strategy. Some observers feel that the Spinner and Nullsoft acquisitions are one of many announcements AOL will make in coming weeks to answer those criticisms.

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