£31m deal is sweet music for Gabriel

ROCK star Peter Gabriel is netting up to £5.6m on the sale of his internet music group On Demand Distribution - known as OD2 - to Seattle-based tech group Loudeye.

OD2 is being sold for up to £31.3m, consisting of £11.3m in cash and Loudeye shares upfront, £9.6m over the next 18 months and up to £10.3m more over 30 months depending on performance.

Gabriel, former frontman of 1970s progressive rock band Genesis, owns 18% of OD2, which he co-founded.

He said the deal would deliver the best digital music service for consumers and labels 'that are also committed to being fair to artists'.

Chief executive Charles Grimsdale, who stays on to run the group's international business, owns 15%, worth up to £4.6m.

Set up as a counter to internet piracy, OD2 had quarterly sales of £1.4m and claims to be Europe's biggest seller of downloaded music, with content from all the main record labels and hundreds of independents.