eMusic Merges with E-Book Distributor K-NFB Reading

Online music service eMusic merged on Monday with an e-book distributor K-NFB Reading to form the new company Media Arc Inc.

Media Arc "will offer a comprehensive source of more than 17 million songs, 40,000 audio books and 600,000 eBooks," according to a statement that the New York music retailer sent to label partners about the merger. The statement was obtained by the Wall Street Journal, which initially reported the news. eMusic and K-NFB will remains as operating units of the new company, the statement said.

Terms of the deal weren't disclosed.

Reached in South Africa on Tuesday, Adam Klein, the chief executive of eMusic, said he would "move on" from his post at eMusic.

"I am so pleased with the next phase for eMusic -- I was brought in to turn it around and reposition it for next chapter of growth, and that is what has been achieved.  So I am declaring victory and moving on feeling fully accomplished with my task there and leaving in place a spectacular team."

Messages sent to Blio's press liaison were not immediately returned.

"As a new company, eMusic and K-NFB will leverage their combined technologies and expertise to create a consumer-centric interface that makes discovering, interacting with, and purchasing all kinds of media content more accessible and seamless for consumers," the statement reads. "The goal is to be able to sell more content for our partners by providing electronics manufacturers, retailers, MVPD/wireless companies, and others with a multimedia content solution to better compete in today's market."

eMusic, which has a small but passionate following of music buyers, has struggled to find the right business model to compete with much larger rivals Apple's iTunes, Amazon.com's MP3 store and, more recently, Google Play. Founded in 1998 as an online purveyor of CD's, eMusic pivoted in 1998 to become one of the first retailers to sell music as MP3 downloads. But it wasn't until 2009 that eMusic began to secure the licenses to sell downloads from major record labels. Sony Music was the first of the majors to sign with eMusic, followed by Warner Music and Universal Music in 2010 and EMI in 2011.

But eMusic's approach -- requiring monthly membership fees that can be used as credits to purchase discounted music -- never quite caught on with mainstream buyers who flocked instead to iTunes' and Amazon's more straightforward proposition of 99 cents a track.

Earlier this year, eMusic diverged from its membership-only rule and allowed non-subscribers to purchase music -- but at full retail prices that range from 99 cents to $1.29 a track.

What may have brought Blio and eMusic together, however, was the latter's lesser known business of selling audio books -- also in digital format. Launched in 2007, eMusic's audiobooks store features more than 15,000 titles.

K-NFB, based in Newton, Mass., is a joint venture between the National Federation for the Blind and Ray Kurzweil, a futurist and inventor who developed optical character recognition (OCR) technology and who represents the "K" in K-NFB. Kurzweil created the Blio reader in 2010 as an e-reader software that lets book publishers weave videos, audio and interactive features into traditional texts. K-NFB teamed up with book distributor Baker & Taylor to convert and digitally distribute eBooks on Windows, Android and iOS devices, as well as on computer browsers.