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FullAudio Gets Universal, Clear Channel Deals

Online music firm FullAudio Corp. said on Monday it clinched a licensing deal with Universal Music Group and a distribution pact with top radio broadcaster Clear Channel Communications Inc. as dealmaking picked up in the Web music sector.

The agreements came as federal regulators scrutinized several ventures involving big music companies.

FullAudio’s deal with Vivendi Universal’s Universal Music, the world’s largest record company, comes a week after AOL Time Warner Inc.’s Warner Music signed a pact with Echo Networks in its first outside licensing deal with a subscription provider.

The two-year deal with Universal covers several hundred titles, including music by Sting and U2. It marks the fifth content deal for FullAudio and is Universal’s first licensing pact for a subscription service outside of its own interests, including its Pressplay venture with Sony Music.

By cutting a deal with Clear Channel, the nation’s top radio broadcaster, FullAudio nabbed the first big distributor for its online music service, expected to launch next January, with monthly fees ranging from $5 to $15.

FullAudio will be the exclusive music subscription provider for Clear Channel’s station Web sites in five cities, including Chicago, Houston, Los Angeles, Phoenix and Salt Lake City.

“This is great news for FullAudio,” said Lee Black, an analyst with research firm Webnoize. “Clear Channel, with more channels than anyone else, has been exploring the interactive space for quite some time.”

Echo and FullAudio are among a handful of remaining standalone online firms competing with global music companies as they launch online subscription services.

The major labels banded together to develop their own services, MusicNet and Pressplay, to tap into the huge audience that once flocked to Napster, the popular song-swap service idled since July after a recording industry copyright infringement suit.

The big labels are facing pressure to cut licensing deals with smaller firms due to a Justice Department antitrust probe into MusicNet and Pressplay. MusicNet is backed by Warner, RealNetworks Inc., EMI Group Plc and Bertelsmann AG’s BMG.

Several more deals were expected in the coming weeks. Warner Music Executive Vice President Paul Vidich told Reuters last week he expected more agreements in the next month or two, while sources close to EMI also expected to license music to four more online subscription services within 30 days.

FullAudio has been ahead of several rivals in landing licensing deals. The Universal deal announced Monday followed previous agreements with the publishing arms of Universal, EMI and Bertelsmann as well as EMI Recorded music.

Publishers hold rights for compositions, while record labels hold rights for sound recordings. Both are needed to launch online subscription music services.

FullAudio will provide a platform for music downloads that allows digital music files to be kept in subscribers’ PCs, with access as long as subscriptions are paid.

If users fail to pay, they will be unable to access music already downloaded.

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