Bertelsmann Deals For

German media conglomerate Bertelsmann AG agreed to buy Myplay Inc., a struggling Silicon Valley company that was one of the first to let consumers store digital music on the Web.

Terms of the deal announced Wednesday weren’t disclosed.

The move by Bertelsmann’s eCommerce Group is the latest by established companies around the world to snap up Internet music start-ups. On May 20, Vivendi Universal SA (V) announced the $372 million purchase of Inc. (MPPP), another Internet-music pioneer whose offerings included a service that competed with Myplay’s.

Bertelsmann is establishing a new service called BeMusic that will include the operations of Myplay and several others, including the online retailer CDnow, the music club BMG Music direct and Bertelsmann’s alliance with Napster Inc., the music-sharing service, people familiar with the situation told The Wall Street Journal.

Myplay, Redwood City, Calif., helped popularize the concept of a Web storage locker that would allow consumers to listen to recordings they own from any computer or other device connected to the Internet. More recently it had developed services to help other companies that want to sell music subscriptions on the Internet.

But Myplay was forced to slash its work force by 41% earlier this year as funding sources dried up for music start-ups. Its 31 remaining employees are expected to join Bertelsmann.

Bertelsmann had considered bidding for, but came to the conclusion that it was too costly and that Myplay’s technology was superior, the Journal reported.

Bertelsmann last year allied itself with Napster although its own music division supported the recording industry’s lawsuit accusing Napster of copyright infringement.

U.S. District Judge Marilyn Hall Patel ordered Napster shut down last summer, though an appeals court later deemed her ruling overly broad. The judge said last month, however, that she may again order Napster shut down, saying its efforts to block copyrighted material have been ineffective.

Copyright (c) 2001 Dow Jones & Company, Inc.