RealNetworks is to purchase Xing Technology, a developer and distributor of MPEG and MP3 audio software, for about $US75 million.
RealNetworks will acquire Xing, based in San Luis Obispo, California for not more than $US75 million in shares of RealNetworks common stock, which will represent approximately 1% of the total shares, according to a release issued today.
The acquisition is expected to be completed in the third quarter of 1999. Xing developed the AudioCatalyst MP3 encoding software, which allows music to be transferred from any audio format into the MP3 format.
The increasing popularity of music over the Internet has become a significant industry, and according to a recent Forrester Research report, digital music downloading will add $1.1 billion to the US music industry's value by 2003. In spite of concerns about music companies losing money from pirated downloads, paid downloads will surpass pirated downloads by 2003, said Forrester.
Yesterday, RealNetworks announced a joint venture with IBM Corp. to produce new technology to distribute music over the Internet.