Founded more than 150 years ago, Steinway Musical Instruments (NYSE: LVB) is one of the top musical instruments companies - with brands like King trombones, Bach Stradivarius trumpets and Ludwig snare drums.

But with the relentless march of new technologies, Steinway realizes it needs to keep up with the times. So, the company recently plunked down $4.5 million for ArkivMusic, which is a web-based retailer of CDs (the price tag may be higher because of an earnout).

True, CDs are not necessarily cool. But, for an older demographic, there is still demand. And, that's something that Steinway understands.

There's also the possibility of a long-tail effect. That is, music lovers want to buy hard-to-find titles - which is much easier on the Net. ArkivMusic library has 90,000 titles and thousands of them are out-of-print recordings.

Moreover, with the backing of the Steinway brand, there should be some cross-sale opportunities. In fact, ArkivMusic is already growing at a health 30%+ annual rate.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Steinway buys some tech magic originally appeared on BloggingStocks on Fri, 23 May 2008 16:02:00 EST. Please see our terms for use of feeds.