(sub. req.) OD2, Europe’s biggest online music distribution company, is set to make an announcement today, and this DJ Newswires story wonders whether it will be a sale or partnership announcement. In March, the company said it had hired investment bank Broadview, a unit of Jefferies & Co., to look at various options for its future, and according to sources back then, a sale is one option that has been explored.
The company, an ASP for digital music services, has companies like MSN UK, Coca Cola UK and Tiscali, but it an open secret in the industry that it has been bleeding money since the start. The European music market remains a minefield, and making any decent amount of margins is prohibitive, hence the high prices for downloads. That is a vicious circle, as consumers are still not buying..
The entry of Napster and Apple iTunes has made it even more difficult for the company, and according to some rivals I have spoken to, OD2 is hobbled with some old technology, and its management, which includes star founder Peter Gabriel, are looking for a way out.
But, as this story illustrates, that’s easier said than done: Any deal would have to be carefully constructed to make sure it doesn’t cause conflicts of interest with OD2’s existing partners on either the retail or technology side. Also, conflicts between music production and retail are at the heart of the EU competition regulator’s probe into the proposed merger between the music units of Sony and Bertelsmann.
Related:
– OD2, Microsoft Team Up on Windows Media Jukebox
– OD2 Cuts Download Price to Foil Napster UK Launch
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