Tech Shout!

On Friday, Warner Music Group announced that it will be acquiring independent recording company Ryko Corp. for $67.5 million. Ryko Corp. distributes music by artists such as Elvis Costello, David BowieThe Posies, Big Star and Frank Zappa.

New York-based Warner Music will be making the transaction with Ryko in cash. Ryko was owned by a group of investors led by JPMorgan Partners.

The move will increase Warner’s music collection with some 1,000 recordings from Ryko’s catalog of jazz, folk, rock, blues and other genres.

The value of catalog recordings has risen in recent years as record companies have found new sources of revenue from licensing music for use by wireless carriers, online music services and in television and film.

Ryko’s collection of recordings includes works by independent music stalwarts such as They Might Be Giants, The Dead Milkmen, The Flaming Lips and The Replacements.

The recordings will be marketed under Warner’s Rhino Entertainment label.

Ryko’s flagship label, Rykodisc, will continue to run independently under the Warner shade, the company said.

Reputedly one of the first CD-only independent record labels in the United States, Rykodisc, was founded in 1980 in Salem, Massachusetts.

Ryko Distribution, which handles releases for Rykodisc and several small independent music labels, will continue to operate separately of Warner’s own independent label distribution operation, Alternative Distribution Alliance.

Warner sees Ryko and Alternative Distribution Alliance as complimentary operations, because Ryko has been successful at distributing output from labels selling far fewer units than the independent labels handled by Alternative Distribution Alliance.

Ryko CEO Sam Holdsworth, who was brought in by JPMorgan, will be stepping down, but Jim Cuomo, president of Ryko Distribution, and William Hein, president of the Rykodisc label, will continue.

Warner said it does not expect the Ryko acquisition to play a role in its 2006 earnings.

The deal will be most probably closed by early June; Warner does not plan any suspensions due to the deal.