BMG Entertainment deal sparks Liquid Audio shares

Liquid Audio shares soared up 5 1/2, or 42 percent, to 18 1/2 Friday after inking a deal to sell digital music downloads from BMG Entertainment's catalogue.

BMG, the entertainment arm of Bertelsmann AG, said it will begin with an offering comprising current hits and catalog product that consumers can experience through secure software and hardware products.

It plans to offer content for sale through online retailers using Liquid Audio software to integrate component technologies from other companies like International Business Machines Corp. (NYSE: IBM), InterTrust Technology Corp. (Nasdaq: ITRU) and Microsoft Corp. (Nasdaq: MSFT) technology platforms.

BMG said it will ramp up the number of titles made available significantly with the goal of having a substantial amount of music available for sale through electronic distribution by this holiday season.

BMG selected software company Liquid Audio to develop the infrastructure that will integrate various music delivery components into one interoperable system.

Liquid Audio shares fell to an all-time low of 9 3/8 earlier this week after hitting a high of 49 1/4 in November.

All four analysts following the stock rate it a "buy" or "strong buy."

Reuters contributed to this report.>