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AOL purchases MusicNow subscription service

/ Source: The Associated Press

America Online Inc. expanded its offerings to digital music consumers with the acquisition of the MusicNow subscription service from Circuit City Stores Inc., AOL said Thursday.

Terms of the deal, which closed earlier this week, were not disclosed.

The service, which will be re-branded as AOL Music Now, will compete with other digital music services like iTunes and Napster. AOL Music Now will offer users the option of purchasing songs for 99 cents each or a subscription service that allows unlimited downloads for either $9.95 or $14.95 a month.

The cheaper subscription allows downloads only to a computer, while the more expensive option also allows downloads to a compatible portable music player.

AOL said MusicNow’s 40 employees will remain at their Chicago headquarters and operate as a wholly owned subsidiary within AOL, a unit of New York-based Time Warner Inc.