Steinway Musical Instruments Inc. [
LVB] has agreed to pay at least $4.5 million to acquire online CD retailer
ArkivMusic LLC, which specializes in selling classical music. The deal includes an up-front payment of $3 million, followed by three annual payments of about $500,000. The deal also may include additional performance-based payments, according to a company
statement about the deal.
Older music buyers still buy CDs, and classical music listeners tend to be older. They're also more likely to care about sound quality and to seek out obscure and out-of-print recordings. Only 5% of ArkivMusic's customers download music online, according to a Steinway spokesperson, and 10% of its 2007 sales came from the company's on-demand CD burning program, which caters to fans of out-of-print music. ArkivMusic claimed a growth rate in excess of 30% in 2007, bumping annual sales up to more than $8 million.
Steinway will operate ArkivMusic as a standalone business, and its management team will remain intact, the spokesperson said. In addition to its well-known piano business, Steinway also sells horns, woodwind instruments, drums and other products through its Conn-Selmer division. Overall, Steinway posted net income of $15.4 million on revenues of $406.3 million in 2007.
-- Paul BonanosSee May 19 statement on ArkivMusic deal from Steinway
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