Taiwan high-speed Internet access firm GigaMedia Ltd. said on Monday it would sell part of its music Web site to record label EMI Group Plc in a strategic alliance to jointly offer music downloads.
U.S.-listed Giga said it spun off its Juice.com music site into a separate company capitalized at T$100 million and EMI would take a minority stake in the firm. Officials declined to give financial details of the agreement.
“The alliance supports our goal of creating new platforms to promote our artists and distribute their music in a secure, protected, and commercially viable manner,” Mathew Allison, president of EMI Music Asia, told a news conference.
Allison said the new Web site, named GigaMusic, would be the company’s second partner selling downloadable music from EMI artists like Mariah Carey, Robbie Williams, Hikaru Utada of Japan and China’s Faye Wong.
“It would be primarily focused on the Taiwan market and Taiwan artists, but we are also looking for opportunities to use it to promote overseas artists too,” Allison said.
Like EMI’s first Asian partner, Singapore-based Soundbuzz, GigaMusic downloads would use the Windows Media Audio (WMA) file format developed by software giant Microsoft (NasdaqNM:MSFT – news), which owns about 10 percent of GigaMedia.
Analysts say WMA offers more protection against piracy than the easily copied MP3 format, which is widely used to distribute free music over the web in services such as Napster.
GigaMusic is scheduled to begin operations in late 2001 and begin by hosting Web sites of local EMI artists, aiding record promotions and offering music downloads.
It would later provide electronic commerce and a subscription service with a personalized Internet radio station and streaming video, said GigaMedia chief executive officer Raymond Chang.
“At this point, we welcome offers from other record labels as well,” Chang added.
The deal with EMI is GigaMedia’s second alliance this year to entice users to take advantage of its high-speed Internet access over cable television lines with fee-based content.
In February, Giga spent T$339 million to buy a seven percent share in Gamania Digital Entertainment Co. Ltd., Taiwan’s largest multiplayer online gaming service.
Like many Nasdaq-listed Internet firms, loss-making Giga is searching for new revenue streams to boost its bottom line.
Giga posted a net loss of US$36.5 million for 2000, widening from 1999’s US$21.1 million and cut staff by about 120 workers or 25 percent of its workforce.
On Friday, Giga shares gained US$0.17, or 7.56 percent, to close at US$2.42 while the Nasdaq composite index gave up 1.01 percent.
