ArtistDirect leaning toward digital media.

Digital music company ArtistDirect has acquired the assets of MediaDefender, a leading provider of Internet-based anti-piracy solutions, for $42.5 million in cash. The move is part of a larger shift away from recorded music operations and a push toward digital media services and solutions by L.A.-based ArtistDirect.

As part of that transformation, the company -- which is fronted by chairman Ted Field, a former Interscope executive, and CEO Jon Diamond, best known for his work with e-commerce sites N2K and CDNow -- earlier this year completed a restructuring that saw the spinout of its four-year-old label operation, ArtistDirect Records.

The company is now exclusively focused on digital-related businesses, including a collection of music information, merch and commerce sites called the ArtistDirect Network, anchored by artisdirect.com and loserkids.com.

MediaDefender will help the company diversify into business-to-business solutions.

Much of MediaDefender's work involves discouraging piracy of music and films, however, ArtistDirect says it also expects to expand into other areas in the future including straight-to-DVD, video and computer games, software and e-books markets. Additionally Diamond also says he anticipates the deal will enable the company to capitalize on direct marketing and advertising opportunities in the post-Grokster P2P environment.

"[Anti-piracy] is the most significant issue the industry is addressing and we want to play a significant role in providing this type of solution," says Diamond.

Randy Saaf, President and CEO of MediaDefender, will continue to oversee anti-piracy operations.

No headcount reductions are expected. The companies will continue to operate under their respective brand names.