Net music firm ascends to Nasdaq

EMusic.com, formerly GoodNoise, enters the big leagues today as its stock moves from the OTC Bulletin Board to the Nasdaq Stock Market.

3 min read
Net music company EMusic.com enters the big leagues today as its stock moves from the OTC Bulletin Board to the Nasdaq Stock Market.

The company, which today changed its name from GoodNoise, will begin trading on the Nasdaq under the symbol "EMUS."

"We believe that EMusic is an ideal name from a variety of perspectives. In addition to its simplicity and memorability, it also defines our focus--the electronic distribution of music," Gene Hoffman, president of EMusic.com, said in a statement. "As we expand from our initial focus on modern/alternative rock and into genres such as jazz, world/fusion, and classical, EMusic provides a flexible brand that will work across these categories."

The move from the Over-the-counter Bulletin Board to the Nasdaq signals a maturation for EMusic.com, which offers music for download from an array of artists.

Companies that list on the OTC, unlike Nasdaq-listed companies, do not have to meet minimum financial requirements to be listed or to maintain their eligibility, nor are they subject to filing financial documents such as annual or quarterly reports.

For investors, the move provides more liquidity in the stock. Companies that trade via traditional markets have an easier time selling and buying stock compared to those that trade on the OTC bulletin boards, where sales and buys may take more time to be matched.

In addition to the move, EMusic.com today announced that it has named Ed Rosenblatt, a music industry veteran who cofounded Geffen Records, to its board of directors. The company also relaunched its Web site with a new design and more content, the firm said.

Redwood City, California-based EMusic.com offers downloads in the MP3 format (MPEG 1, Audio Layer 3), though executives have said they will adopt whatever download format consumers want.

The Net music boom
Today's changes come one day after America Online acquired Net radio firm Spinner and online music technology company Nullsoft, maker of the popular Winamp MP3 player. The all-stock deals are valued at $400 million, AOL said.

The changes at EMusic.com and the acquisitions by AOL underscore the fast-moving evolution taking place in the online music business on a number of fronts. Music industry and technology players are vying to offer the standard technology to be used for music downloads by the mass market, while the Recording Industry Association of America, which represents the major U.S. record labels, is working with many of those same companies on specifications for secure music downloads.

The RIAA's project, dubbed the Secure Digital Music Initiative, is charged with developing a spec that ostensibly could be embedded in any download technology. But a number of players--including Sony, IBM, Universal, AT&T, and Microsoft, among others--are developing download technologies they hope will replace MP3.

Though the MP3 format is legal, it is hated by many in the mainstream music industry because it lacks built-in copyright protection. Yet MP3's ease of use has earned it status as a de facto standard for online music downloads--for the moment, at least.

In addition, users are listening to more music online through Internet radio. According to a study earlier this year by media research firms the Arbitron Company and Edison Media Research, the number of U.S. Net users listening to online radio more than doubled over a six-month period.

Net radio's popularity has led it to become a must-have feature on portals and music hub sites. Along with AOL's purchase of Spinner, Net radio firm Imagine Radio was bought by Viacom in February.

For its part, EMusic.com has been busy shoring itself up in the face of all the competition arising in the Net music space. The company last month acquired veteran site the Internet Underground Music Archive. It has expanded its music offerings over the last few months and in March completed a $31 million round of financing.

Although EMusic.com's name change went into effect today, it is subject to stockholder approval, which is expected to take place at a meeting next month, the company said.