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New deals spread RioPort's digital music software

The digital music company behind S3's Diamond Rio MP3 player signs a spate of licensing agreements and raises $31.5 million in funding.

RioPort, the digital music company behind S3's Diamond Rio MP3 player, has signed a spate of licensing agreements and has raised $31.5 million in funding.

The digital music software company's financing is its second round of funding. New investors include Mitsubishi, Quantum Technology Ventures and storage giant EMC.

RioPort develops digital music management software to help download and organize digital music files. It also licenses that technology to third-party device and software makers who want to market their own digital music products.

This strategy is similar to one employed by Diamond Multimedia, maker of the Rio MP3 player, which spun off RioPort as its software division after being acquired by chipmaker S3. The two digital music companies license each other's technology but also strike deals with third-party firms.

Because of its relationship with Diamond, which released the first mass-market portable MP3 player, RioPort had a jump on some of its competition in the music-management software arena. Now the company is looking to stay ahead of the curve by positioning itself as a digital music application service provider, according to CEO Jim Long, acting as a go-between for major labels and online retailers.

"We're a classic aggregator, a technology supplier," he said, explaining that through deals with online distributors, RioPort gets a percentage of every digital song sold. "The whole market is just starting to do e-commcerce. We're just beginning to do it, just like everyone else."

For instance, Diamond ships its Rio portable digital music players with RioPort's software, but it also recently struck a partnership with Dell Computer to sell Dell-branded digital music receivers that do not use RioPort's applications, according to Mike Reed, director of product marketing for Rio.

"We help each other where it makes sense," Reed said. "It doesn't always make sense."

Device makers generally look to third-party developers for music management software. RioPort, along with RealNetworks and Microsoft, markets this software, which builds in compliance with digital rights management and software to play songs on a PC.

RioPort has struck a variety of partnerships, including one with Samsung, which markets the Yepp portable MP3 player. Samsung's next-generation Yepp will include RioPort's Audio Manager software and its Media Device Manager playback application, the companies said.

Another Korean device maker, Sewon Telecom, announced it will use both products in its wireless cell phones and digital music players. Starting in August, Sewon will use RioPort applications in four new models, it said. Human Information Technology also will use the software in its player, the company announced.

Two online companies, Nifty and Bolt, also said they will use RioPort's download services and digital audio content.

RioPort also released the newest version of its Media Device Manager, which support Microsoft's recently released Windows Media Player 7.