HMV boosted its position in the digital entertainment market today by acquiring a 50% stake in online music services company 7digital.
The music and games group, which also owns book chain Waterstone's, said 7digital will become its single supplier for all existing digital operations.
7digital's technology currently powers services for clients in Europe and America, including Spotify and Last.fm, as well as music labels and artists.
News of the joint venture emerged as HMV reported a solid start to its new financial year, with like-for-like sales at its music and games retail chain ahead 1.7% in the 18 weeks to August 29.
The figure for Waterstone's was down 3.4%, but HMV said this was in line with the rest of the book market.
HMV, which is paying £7.7m to 7digital's venture capital backers for the 50% stake, said the internet company's co-founders, Ben Drury and James Kane, will continue to lead the business they set up in 2004.
As well as access to a catalogue of more than six million digital music tracks and video entertainment, 7digital will also provide HMV with a new e-books store, enabling Waterstone's to develop its position in the digital market.
HMV operates 400 stores in five countries including Northern Ireland, as well as 313 Waterstone's outlets.