Sony will buy Gracenote, which made its name with software that identifies digital music files, for about US$260 million.

Sony will keep Gracenote as a wholly owned subsidiary and use its technology in its own digital content, service and device offerings. But Gracenote's current business will keep operating separately and developing new technologies, and its management will remain, Sony said. It will pay $260 million plus "other contingent consideration," the company said.

Although it pioneered portable music players with the Walkman cassette player and jointly developed the CD, Sony's digital and online music efforts have fallen short of competitors such as Apple. The company shut down its Connect music store last August after trying to compete against Apple's iTunes for three years.

Gracenote, formerly CDDB, maintains a database of information about music and uses it in a variety of applications, including identifying tracks, finding similar songs and presenting lyrics and other relevant content.

Its customers include iTunes, Yahoo Music Jukebox, and companies in the mobile music business, such as Sony Ericsson, Japanese carrier KDDI and Europe's Musiwave. Consumer electronics suppliers, including Sony, also use Gracenote technology in their products.

The companies expect the deal to close in late May.