With the acquisition, Digital Island, based in San Francisco, is hoping to create a powerful multimedia network integrated to support online business transactions.
The only term of the deal that was disclosed is that the amount is based on yesterday's closing price of Digital Island stock, which ended the day at $82. The stock has traded as high as $156.94 and as low as $8.63 during the past 52 weeks.
The company is aiming at hosting online video streams--from business conferences, concerts and Web events--bundled with e-commerce opportunities.
With New York City-based Live On Line, Digital Island said it can integrate advertisements into television-quality streaming events, letting consumers click on the ad and complete a transaction.
"Our customers have indicated that rich media fills a critical need in their global e-business strategies as they seek new and competitive ways to do business on the Internet," Ruann Ernst, Digital Island's chief executive, said in a statement. "Augmenting rich media with the ability to consummate a sale anywhere in the world increases the value of that media significantly."
The company said its new service is capable of handling more than 250,000 concurrent streams and is expected to grow to 700,000 concurrent streams by the end of the calendar year.
Digital Island said its network runs all major formats, including MP3, QuickTime, RealAudio G2 and RealVideo G2, and Microsoft's Windows Media Player.
Last month Digital Island completed its $630.5 million merger with Sandpiper, which helps publishers deliver content via the Net.