Scour Assets Spark Bidding War

Internet music company Liquid Audio, Inc. (Nasdaq: LQID) has jumped into the bidding for bankrupt Scour, the online entertainment venture backed in part by Hollywood heavyweight Michael Ovitz.

Liquid Audio, based in Redwood City, California, said it is filing a bid forScour’s technology assets, including its peer-to-peer file-sharingapplication, with the U.S. Bankruptcy Court in Los Angeles.

Bidding War?

The announcement raises the stakes for Listen.com, which last month said itwould buy Scour’s assets, subject to bankruptcy court approval. Scourpresident Dan Rodrigues said at the time that the sale of the company’sassets to Listen.com would be “in the best interest of all of the company’sconstituents.”

‘Logical Extension’

Liquid Audio said that integrating Scour’s technology into its own musicdistribution system would enable the more than 1,000 retail sites in theLiquid Audio global distribution network to add music-sharing services.

Music e-tailers including CDNow, Best Buy, TowerRecords.com,HMV and Musicland use Liquid Audio software and services.

“Peer-to-peer capabilities are a logical extension of our secure musicdistribution system,” said Liquid Audio co-founder and chief executive officer Gerry Kearby. “Our goal is to enableour network of retailers to offer subscription services, includingpeer-to-peer downloads, that complement their online music stores.”

Bankruptcy Protection

Los Angeles-based Scourfiled for bankruptcy protection in October after lawsuits from themusic industry and a shakeout in the dot-com sector diminished the company’soptions.

In its bankruptcy filing, Scour said the move would allow it to evaluate itsoptions and stay all pending litigation. The company had been sued by theMotion Picture Association of America (MPAA), the Recording IndustryAssociation of America (RIAA) and the National Music Publishers Association(NMPA). Scour has said the suit is without merit since its music andvideo files are shared by individuals.

In mid-November, Scour shut down its file-sharing exchange, saying that doing so would “help ease the sale” of its technology and assets.

Listen.com Has Backing

San Francisco-based Listen.com, which distributes digital musicand runs an Internet radio service, enjoys financial backing from BMGEntertainment, EMI Recorded Music, Sony Music, Universal Music Group andWarner Music Group.

Listen.com chief executive officer Rob Reid said his company “can developScour’s assets into a means to distribute multimedia content in a way thatrespects rights holders.” Listen.com products are syndicated and sold toportals and Web sites such as Yahoo! and AltaVista, which use them in theirmusic sections.

Another company, CenterSpan, has also reportedly entered a bid for Scour’s assets.

In addition to its file-sharing assets, Scour has an entertainmentsearch site and an online radio community.

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