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Microsoft adds to Windows Media deals with Intertainer stake

On the heels of its Windows Media licensing deal with Liquid Audio, the software giant makes an undisclosed investment in the broadband entertainment services provider.

On the heels of its Windows Media licensing deal with Liquid Audio, Microsoft today made an undisclosed investment in Intertainer, a broadband service that delivers entertainment content to users with high-speed Net connections.

Microsoft will gain access to Intertainer's offerings, including movies, music, TV programs and shopping services, to be delivered via PCs and television. In return, Intertainer will adopt Microsoft's Windows Media software and related technologies. The New York Times reported that Microsoft's investment was $56 million, giving the software giant a 20 percent stake in Intertainer.

Just last week, Liquid Audio said it would license Microsoft's Windows Media technology for its Internet music distribution system.

Liquid Audio, which distributes digital music from record labels to Web sites with security and copyright protections, will add Microsoft's Windows Media Format to a handful of others currently supported: the Advanced Audio Codec, Dolby Digital, Sony Atrac 3 and MP3.

Redwood City, Calif.-based Liquid Audio does not support RealNetworks' streaming audio format, however, the chief competitor to Windows Media player.

"This deal crystalizes the roles and vision that we have for audio on the Internet," Kevin Unangst, group product manager for Microsoft's digital media division, said of the Liquid Audio deal in an interview. "We're not a service provider, we're a technology provider. We license our technology to the whole industry."

Microsoft and Liquid Audio did not disclose terms of the deal but noted that Microsoft's Audio Player is licensed along with the Windows operating system for no additional cost. Redmond, Wash.-based Microsoft did not make an investment in Liquid Audio, representatives said.

Microsoft founder, chief software architect and former chief executive Bill Gates last month disclosed his involvement with venture capital firm Hummer Winblad, which has invested in Liquid Audio.

Under the agreement, Liquid Audio will encode and distribute more than 50,000 downloadable songs and 1 million music samples in the Windows Media format; deploy Windows Media servers for hosting and distributing content in the Windows Media format to retailers; and support the Windows Media Digital Rights Management for copyright management and reporting.

Liquid Audio will put Windows Media servers in its hosting centers over the next few months and complete the process of integrating Windows Media technology with Liquid Audio's range of services over the coming year. Liquid Audio's next major upgrade will support Windows Media technologies.