Under terms of the deal, Liquid Audio will provide HMV.com with secure downloading services and software that will help the music retailer promote and sell its music.
Analysts said the partnership will help HMV expand its audience and increase recognition. The Canadian company mainly has been known as an offline music retailer.
"There is a demand to pay for online music," said CyberDialogue senior media analyst Idil Cakim. HMV is "a very recognized name offline...This is an innovative way of expanding their brand online."
When a customer purchases music at HMV.com, a link will allow the customer to download the track to a hard drive. Once the download is completed, the customer can listen to the music from the hard drive using Liquid Player software.
Andrea Fleming, vice president of corporate marketing for Liquid Audio, said the software allows people to make custom CDs that work in a car or home stereo. It also lets people export music to a portable digital music player.
Music retailers and record labels are inching toward offering music libraries online. EMI Recorded Music has said it would make 100 of its albums and 40 singles available for download this summer. Sony Music has unveiled ways to offer its music using secure digital formats and its Memory Sticks. And Seagram's Universal Music Group has said it plans to launch a secure download format that will eventually allow people to download most of its songs.
But attempts to keep control of copyrighted music remain a challenge. By using Liquid Audio's software, HMV.com gets a secure method of downloading its music, said Peter Luckhurst, president of HMV North America.
"This is a small step, but at the moment...digital music is pirated, and this is more of an ethical way of acquiring it," Luckhurst said.
A recent CyberDialogue study showed that 29 percent of people who download music would buy entire albums online for $10 apiece. The study also found that nearly 11 million online music buffs would have an "interest" in paying a monthly subscription fee to download their favorite tunes.
"HMV has a large selection of music, and they're getting the fans to enjoy the music by using Liquid Audio's technology," Cakim said. "So they're stepping into the digital music pool and expanding their services and getting a new online face together with their established offline brand."
News.com's Jim Hu contributed to this report.