Web-hosting and content-delivery firm Digital Island Inc. today said it has bought Live On Line Inc., a provider of live, on-demand streaming media services, to create a multimedia network with support for online transactions.

The cash and stock deal, worth $70 million, is based on Digital Island's Jan. 18 closing price of $82 per share.

The combination of Digital Island's multiple networks with Live On Line's streaming media will enable it to provide live, on-demand streaming events that integrate advertising content and transaction capabilities. Live On Line, based in New York, has three years of experience in broadcasting live events on the Web.

Digital Island says the streaming media service can handle more than 250,000 concurrent streams and is expected to grow to 700,000 by the end of the year. The service can support 840 unique satellite downloads daily and has an aggregate bandwidth of more than 7 Gbps.

Digital Island plans to offer its Web-hosting, design, implementation, and content-distribution services on a revenue-share basis. In exchange for building an E-commerce infrastructure, the company will receive a percentage of the revenues earned during a Webcast.

Live On Line's CEO, Adam Cohen, will become Digital Island's VP of streaming, live events. Debra LaChance, president of Live On Line, will serve as Digital Island's VP of streaming production and operations.

Alex Benik, a data communications analyst with the Yankee Group, expects this will be a "breakout year" for streaming services. The acquisition, he says, will better position Digital Island to compete with rivals such as Akamai. Says Benik: "Digital Island is using streaming media as way to retain customers and to drive their hosting business."