Tony Smith reports for The Reg that the labels have dumped their shares in MusicNet. It was bought by Baker Capital, a New York-based private equity firm (or VC as we tend to label them in the US). The details of the deal are private, but one item caught my eye:

The takeover will give [MusicNet] the funding it needs to expand, to license more content and take that content to more big-name retail partners, [MusicNet's PR release] said.

Which, if you read it the way I do, is an oblique way of admitting that the labels were starving the enterprise for cash. Gee, shall we sit back and speculate on why they wouldn't invest in their own downloadable music service? Could it be they didn't want it to succeed because, you know, that might legitimize this whole download business model? Maybe. Or it may be, as Smith notes, that the labels don't want to be in the digital distribution game, preferring to license content to third-party distribution channels such as AOL.