News OD2 to withdraw from downloads battle

It's too hot in the Kitchen for OD2, now the big boys have arrived, according to ZDNet:

Loudeye is to buy European online music service On Demand Distribution for roughly $38.6m in cash and stock to help fend off well-financed rivals in the cutthroat downloads market.

In the past month, OD2's long-held position as Europe's primary digital download provider has evaporated with Sony, Apple and Roxio's Napster all entering the market to much fanfare.

Bracing for a competitive onslaught, the privately held British-based OD2 earlier this year hired investment bank Broadview International to help it explore various funding options, including a potential sale.

Rather than compete with well-known brands such as iTunes and Napster, the newly combined company will become a back-end supplier to the big players, providing digitised music services to dozens of retail partners in Europe and North America.

The companies said that an initial guaranteed payment in cash and shares of $20.7m would be paid for the Bristol-based OD2. Loudeye also agreed to pay about $17.5m over the course of the next two years, the companies said.

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