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Loudeye tunes in to Net radio

The digital media company launches a service that gives companies all the pieces they need to build their own online radio stations.

Digital media company Loudeye Technologies on Wednesday launched a service that gives companies all the pieces they need to build their own online radio stations.

Seattle-based Loudeye said its new Loudeye Radio will offer custom programming and players, syndication, and ad-insertion technology to everyone from e-tailers to Web portals. It will also provide access to Loudeye's archive of digital music, which contains new releases from major record labels and more than 800 independent companies.

The launch marks Loudeye's latest attempt to expand its offerings. The company is primarily known for its encoding business, which places video and audio into digital formats.

Phil Benyola, research associate for investment company Raymond James, said that with its radio service, Loudeye is attempting to diversify by gravitating from encoding.

"It's surprising to me that (Loudeye) would get into something like this because it's a divergence away from their core traditional business," Benyola said. "But again, they're probably looking at companies like (MP3.com) that has really diversified its offerings and kind of reached in every aspect of music, and it just seems like it would be natural for (Loudeye) to do that."

Like many companies, Loudeye has been struggling in a soft economy. In May, Loudeye cut 45 percent of its 300-employee work force and closed several offices in an effort to reduce costs and integrate its recent acquisitions.

However, some high-profile companies have become interested in Loudeye's services. In May, AOL Time Warner's America Online agreed to use Loudeye's music samples and technology to encode songs into digital formats. The company also has licensing agreements with the Big Five record labels: EMI Recorded Music, Warner Music Group, Universal Music Group, Sony Music Entertainment and BMG Entertainment.

With its latest service, Loudeye is betting that interest in online radio will grow as electronics manufacturers place an iM Band next to the standard AM and FM on audio devices. Joel McConaughy, chief technology officer for the company, said that the time is ripe for online radio because the economic costs in delivering it is continuing to fall.

"People have been trying (online) radio for a long time," McConaughy said. "There were many people who were sort of early adopters on this thing that were there before the economics were in place to do it. We feel very strongly the time is now to get into this thing."