Steinway Musical Instruments, the manufacturer of pianos and other classical-oriented music instruments, has acquired online classical music retailer,

Steinway said it paid $4.5 million for ArkivMusic, $3 million in cash at the closing, and is committed to three annual payments of $500,000. Moreover, additional consideration could be paid, contingent on performance.

The ArkivMusic management team will remain in place and the company will operate as a wholly-owned subsidiary. Last year, ArkivMusic generated $8 million in revenue. It carries about 90,000 titles, with the ability to make 5,000 out-of-print titles on demand, including original packaging and artwork.

In a statement, Steinway CEO Dana Messina said, "We share a passion for supporting outstanding music and musicians, and ArkivMusic is one of the shining lights in the classical music business these days. This acquisition will help Steinway promote thousands of musicians that use our instruments around the globe.

ArkivMusic president Eric Feidner says the deal will help the company "achieve our global growth strategy." He also said "We believe our growing business and extensive relationships with customers, record labels, and radio will add considerable value to a dynamic brand in classical music."

Waltham, Mass.-based Steinway generated $1.98 million in net income, or 23 cents per diluted share, on sales of $98.2 million, in the quarter ended March 31. In its most recent fiscal year, Steinway Musical Instruments posted $15.4 million, or $1.78 per diluted share, on sales of $406.3 million, for the period ended Dec. 31, 2007. All of its sales were in musical instruments, with the piano accounting for almost 58% of sales.

The company's shares closed up nine cents at $25.18 today (May 19).