RealNetworks Picks Up Listen.com

In a cash and stock deal valued at about $36 million, RealNetworks announced this week that it has agreed to acquire Listen.com. Real plans to integrate Listen's Rhapsody music subscription service into its own RealOne offerings. Rhapsody will also transition from Microsoft's Windows Media format to RealAudio.

The deal brings into question Real's future with MusicNet, the joint venture subscription service the company launched with Bertelsmann, AOL and EMI. RealNetworks CEO Rob Glaser says Real will continue to support MusicNet as an underlying technology for other services, but feels Listen has created a "best of breed" experience for consumers.

Taking on label-backed services MusicNet and PressPlay, Listen launched Rhapsody in early 2002. Although the service boasts lower subscriber numbers than its competitors, critics have praised Rhapsody for its ease of use.

While Real plans to immediately make Rhapsody available through RealOne, it is not clear whether the company will drop MusicNet entirely. Such a move could hurt the struggling MusicNet, which has failed to grow as quickly as initially planned - despite its big-name partners.

Set to launch the first MusicNet based offering, Napster ran out of money before it could get its legit service off the ground. Real debuted RealOne Music, based on MusicNet, in late 2001, touting a library of over 75,000 songs. But MusicNet partner AOL did not launch its own subscription service until last February.