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Amplified buys CheckOut.com to expand offerings

The digital content distribution company acquires CheckOut.com, which is backed by Hollywood power broker Michael Ovitz.

Amplified Holdings, a digital content distribution company, on Thursday acquired CheckOut.com, which is backed by Hollywood power broker Michael Ovitz.

As previously reported, assets of the online store and entertainment Web site were to be acquired for an undisclosed sum. The company will operate under Amplified's name and maintain its office in Los Angeles.

Under Thursday's deal, Amplified will combine CheckOut's technology with its own to offer online retailers such services as digital content management, delivery and sales. Wherehouse Music--which signed an exclusive, $40 million deal with CheckOut in November 1999--will take control of the site's music and video sales.

"With this combination, Amplified will significantly expand the products and services offered to the retail and entertainment industries," Amplified Chief Executive Chris Melton said in a statement. "This acquisition allows us to offer...a solid technology platform to meet the immediate needs of an online retail operation cost effectively."

Ovitz and Richard Wolpert, a partner for Yucaipa and former president of Disney Online, formed CheckOut in May 1999. Despite the initial fanfare garnered from its relationship with Ovitz, CheckOut struggled to get a foothold in the Internet industry--in content or in retail.

Industry experts say the major failing of CheckOut is that it never established itself strongly as an entertainment destination or as an e-commerce site. By playing both sides of the fence, the company couldn't fully succeed at either. Market pressures in the industry led to further woes for the company.

Reel.com suffered a similar identity crisis two years after video chain Hollywood Entertainment bought the entertainment site, when it realized that online content and retailing are difficult to house under the same roof.

"Everybody's losing money...We're past the point of thinking attaching a famous name to a Web site has much significance at all," said Malcolm Maclachalan, media e-commerce analyst at IDC.

"They're in a bunch of low-profit businesses; any way out they have to keep alive is probably a good move right now," he added.

Signs of the CheckOut sale cropped up early this year. The company canceled its affiliate program Jan. 6, according to Geoffrey Kleinman, founder of DVD Talk.com, an affiliate Web site to CheckOut. Kleinman said that canceling such programs is usually a sure sign that a company is going out of business.

Based in Beverly see A News.com webcast: Dot-coms: Down and out?Hills, Calif., CheckOut sells music, videos and DVDs on the Internet. It also provides video and audio streaming, reviews, and chats.

Privately held Amplified, based in Atlanta, sells services such as digital rights management, Web hosting, streaming and digital downloads to record labels, entertainment companies and online retailers. Customers of its technology include EMI Recorded Music. The company is backed by Valley Media, Bear Stearns' Constellation Ventures, Yucaipa and Chase Capital, among others.

Last June, CheckOut and Amplified inked a deal to deliver digital music through Amplified's distribution channels.