Anderson Merchandisers, the largest magazine wholesaler in the United States and Wal-Mart's music distributor, has bought Liquid Audio's technology and other assets:

Liquid Audio was at the forefront in developing technology to deliver music securely online but has been in financial straits recently and has suffered through a nasty boardroom fight. The new company, which has not been named, will be run by a Liquid Audio founder, Gerry Kearby, who said the company had licenses to distribute over 350,000 songs.

The acquisition, which is expected to be announced on Friday, signals that recording companies, distributors and retailers are taking the first steps toward working together to come up with ways to combat declining compact disc sales, which have been hurt by free online music-swapping. Anderson, based in Knoxville, Tenn., hopes to distribute music downloads through the Web sites of retailers, including Wal-Mart, though no deal has been worked out yet, an Anderson executive said.

....Still, Charlie Anderson, the company's chief executive, said, "This will strategically position retailers to participate in the industry's legitimate downloading future."

....It is a drastic shift in attitude from two years ago, when music companies saw themselves as at odds with retailers regarding online music. But now retailers, distributors and music companies realize that they need one another more than ever, both in stores and online. [NY Times]