MP3.com moves into Muzak

The company strikes a deal to provide a Web-based retail music and messaging service to more than 530 Petco Animal Supplies stores.

While shopping for cat food and dog leashes, customers of Petco Animal Supplies will get an earful of in-store music as part of a deal between the company and MP3.com.

MP3.com will provide a Web-based retail music and messaging service to more than 530 stores owned by the pet goods retail chain in the United States, the companies said in a statement Tuesday. The audio service is scheduled to be installed in existing stores by the first quarter of 2001 and will be added to new Petco stores as they open.

Financial terms of the agreement were not disclosed.

The move represents MP3.com's efforts to find revenues for its service in offline markets, as the company looks to break free from legal problems and doubts about its long-term commercial viability, analysts say.

"This is a new source of revenue and business opportunity for them," said Phil Leigh, an analyst with Raymond James. "I expect this business to grow for the company, but it will be awhile before it really impacts the bottom line."

One of the largest specialty retailers of pet food, supplies and services, San Diego-based Petco selected MP3.com's digital music and advertising service after a four-month test, the company said.

Analysts expect MP3.com to pursue similar deals. Earlier this month, the company signed a pact with Tower Records to let customers who order CDs through TowerRecords.com immediately listen to their purchases online via MP3.com's music locker service, My.MP3.com.

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