Yahoo! has made a $160 million deal to purchase Musicmatch, a company known for its media player, digital download service and pre-programmed music stations. Yahoo! intends to incorporate the service into its own Launch service.

Launch currently offers a few streaming downloads of songs and music videos. Yahoo! is still deciding how to incorporate the two services together. Jupiter Research estimates 2004 will see $803m in online music sales compared to $158m last year.

Yahoo! chairman and chief executive Terry Semel says: "Yahoo! is committed to being a major player in digital music. This combination bolsters our strategy to capture the largest audience of consumers as they make the shift to digital music."