Hat-tip to PaidContent.org, a good site about the media trade, which reported on Friday about Jupitermedia (NASDAQ: JUPM) purchasing Flying Hands Music, an online library of royalty-free music. Jupitermedia CEO Alan Meckler posted on his blog that that “was part of the company’s strategy to expand, what it believes, is the world’s largest collection of royalty-free music.”

JUPM will be combining Flying Hands with its existing site, RoyaltyFreeMusic.com. It appears Jupiter has larger plans to bulk up its music offering. As announced on Meckler’s blog, JUPM has plans to launch a new way for organizations to buy royalty-free background music for websites and other objectives in late February.

It’s a good thing Jupiter is looking for expansion. Its stock is down 50% for 2007 and its larger competitor, Getty Images (NYSE: GYI) is down by 30%. Both companies have been plagued by what Citibank analyst Matthew Troy called “investor concern about structural shifts in the stock imaging landscape, driven by

rapid growth in alternative channels and forms of lower yielding image licensing” in a research piece in November.

In other words, what was once a lucrative commerce is being eaten absent by smaller sites with aggressive pricing and licensing requirements that just aren’t what Jupitermedia was accustomed to seeing. To address that issue, JUPM has changed its focus to expand into media with acquisitions like Flying Hands.

What investors who have followed the story for some instance are witnessing is that the Jupitermedia investment thesis has changed. Instead of Jupiter spinning off some of these web properties, Jupitermedia is now actually looking to acquire new businesses to amalgamate to their media commerce.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former fairness analyst for a main multinational hedge fund. Author holds no position in stocks mentioned.

Original post by Zack Miller

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