Yahoo to buy Musicmatch for $160 million

Internet company Yahoo Inc. said Tuesday it will buy privately held music software company Musicmatch Inc. for about $160 million in a bid to bolster its online music services.

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San Diego-based Musicmatch offers software that lets users manage digital music collection and listen to online radio stations. Customers also download songs from its music store.

Yahoo said Musicmatch will compliment its own Launch music service that offers Internet radio and music videos and generates revenue through advertising. With Musicmatch, it will produce revenue through subscriptions and downloads.

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Boosted by sales of popular digital music players like Apple Computer Inc.'s iPod, the online music market is expected to grow sharply, and companies like RealNetworks Inc. and Microsoft Corp. and Apple are battling to offer more songs and software to users.

The deal is expected to close in the fourth quarter, the companies said.