A billion-dollar business?

On the eve of its IPO, the digital music site ups its valuation; all the more money to stand up to the recording industry.

Published July 13, 1999 4:00PM (EDT)

Wondering just how hot the MP3 market is today? Look no further than the upcoming IPO for, the portal site for the digital music community., expected to go public this week, announced Monday that it is increasing its initial offering by 3.3 million shares -- for a total of 12.3 million shares. Those additional shares are being snatched up by French investment firm Groupe Arnault, which usually invests in luxury-goods companies like Moet Hennessy Louis Vuitton, according to Bloomberg News.

Meanwhile, also announced that it has raised its initial offering price from the $9-to-$11 range to the $16-to-$18 range, nearly doubling the price per share.

The total valuation of after these announcements: $1.2 billion. And that's before the IPO; with the market's recent history of tech-stock mania, it's probably a fair bet that that valuation will be bid up even further by day traders. Consider that's popularity stems from the free music and software it offers, that its revenue model is still murky and that its main product is a music format that just a year ago was being dismissed as a niche market for college kids and music dilettantes: Now, any questions about what media buzz can do for a Net IPO?

This must be galling for the Recording Industry Association of America, which would like nothing better than to stamp out the piracy-friendly MP3 format. Its own SDMI music format specifications will be released within the next few weeks; will these technical announcements be overshadowed by's IPO?

By Janelle Brown

Janelle Brown is a contributing writer for Salon.

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