Yahoo! Tunes In to Musicmatch

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Close watchers of the online music business no doubt noted yesterday's announcement of Yahoo!'s (Nasdaq: YHOO) purchase of Musicmatch with interest. The portal giant, according to a press release, agreed to buy the digital jukebox player company for $160 million in cash. The deal, though it doesn't necessarily upset the apple cart in the sector, is certainly an interesting one.

In Musicmatch, Yahoo! gets several things, among them an online radio network that lets listeners tune into streaming songs as well as stations free of charge; an online store with some 700,000 songs and prices comparable to Apple's (Nasdaq: AAPL) iTunes; and Musicmatch On Demand, a subscription-based streaming music service.

Those three components, when combined with Yahoo!'s own Launch website -- with content that includes songs, videos, radio, and the written word, plus shopping (of course) -- will put Yahoo!'s fingers in pretty much every online musical pie when the deal closes in the fourth quarter. (OK, it doesn't make devices, but you can certainly buy those through Yahoo!'s shopping channels -- just two clicks from Yahoo!'s homepage.)

What might make the deal most interesting, however, is the fact that Musicmatch also makes the Jukebox software well-known to so many PC users -- Dell (Nasdaq: DELL) owners are nodding their heads -- because it comes pre-installed on so many of the machines purchased each year. (Whether it's used by all those owners is a different story.) The company claims 50 million registered users.

Whatever the key metric is, Yahoo!'s ownership of the company making the software gives it an interesting alternate route onto the desktops of PC and Internet users. It's a nice tool the company now has to work with.

What do you make of the Musicmatch acquisition? Can Yahoo! be a major player in digital music? Share your views with other Fools on our Yahoo! discussion board.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.