Universal Music to Review Web Assets

By | October 21, 2002 at 12:00 AM

Universal Music, the music arm of Vivendi Universal and the world’s largest record company, will decide in coming weeks which of its Web music properties are worth keeping as the French media giant seeks to downsize, sources close to the company said on Thursday.

Company representatives declined comment, but people familiar with the company said such a move was in line with Vivendi chairman and chief executive officer Jean-Rene Fourtou’s overall mandate to sell about $12 billion in company assets to reduce debt.

“One of the things that will be happening in the next few weeks is that Universal Music will be coming in and figuring out how the music Web sites can be integrated into the music company,” said a source familiar with the matter.

VUNet USA Music and Media, an arm of Vivendi’s struggling Internet division known as VUNet, has focused on building businesses around online distribution of music and video, withsites like MP3.com, Getmusic.com and Rollingstone.com.

The division, which has already been downsized, employs about 175 people in New York, San Diego and Los Angeles.

Some of the properties, like Emusic and Rollingstone.com were originally purchased by Universal Music but were then transferred to VUNet when it was formed in October 2001.

VUNet USA Music and Media is part VUNet USA, which also has education, mobile media and online games. Currently, VUNet USA reports to a larger European Internet division known as VUNet, which is expected to be dissolved under Fourtou’s mandate.


Fourtou was called in to turn Vivendi around following the ouster of former CEO and chairman Jean-Marie Messier in July after racking up $19 billion in debts while he sought to transform Vivendi from a 150-year-old staid water utility into a flashy global entertainment giant.

Fourtou has already unloaded the money-losing Internet venture Vizzavi, which was a central focus of Messier’s strategy, and said in late September the company’s other Internet assets would also be sold or integrated with the businesses to which they report.

Vivendi expanded its online music offerings through various acquisitions a few years ago after the industry began its struggle with the phenomenon of unlimited song swapping, introduced by the file-sharing service Napster.

Online music is still a big focus for the world’s biggest music giant, which has launched its own music subscription service known as Pressplay with Sony Corp.

On Thursday, sources close to the company said Universal Music had increased the royalties it pays artists on downloaded music as part of an effort to enlist artists’ support in an ongoing campaign to squelch online piracy.

It’s unclear which properties will be taken under the music company’s wing. MP3.com – originally sued by Universal Music along with the world’s other major music companies in a copyright infringement lawsuit – features streaming and downloadable music, while EMusic, through licensing agreements with more than 900 independent record labels, offers an expanding collection of over 230,000 MP3 songs for download.

Rollingstone.com provides archives from the magazine, including more than 7,000 artist profiles, photos and interviews, and over 1,000 on-demand videos.

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