Circuit City Stores Inc. has inked a deal to acquire the assets of MusicNow Inc., a Chicago-based digital music service. Financial terms were not disclosed.

Circuit City Stores Inc. has inked a deal to acquire the assets of MusicNow Inc., a Chicago-based digital music service. Financial terms were not disclosed.

MusicNow will keep its name and operate out of Chicago as a wholly owned subsidiary of Circuit City.

MusicNow president/CEO Scott Kauffman will continue to oversee the service and its staff of 40. He reports to Fiona Dias, president of Circuit City Direct, the online division of the consumer-electronics retailer.

The move gives Richmond, Va.-based Circuit City an entry into the digital music business. Dias says MusicNow will be integrated into Circuit City's Web site at circuitcity.com. The service will also be promoted in nearly 600 superstores across the United States.

MusicNow says it will continue to distribute its service through a range of third parties, including Clear Channel Communications, Microsoft, SBC Communications and Charter Communications. Best Buy, Circuit City's chief rival, also distributes the MusicNow service; the change in ownership raises questions about how long this will continue. MusicNow officials insist that the relationship will continue in the wake of the deal.

Circuit City says the transaction is not expected to have a material impact on its fiscal 2005 earnings. The deal is expected to close in April.