Amazon.com will purchase all of Audible's outstanding shares for $11.50 per share and assume Audible.com's outstanding stock-based awards. That values the deal at $300 million.

"Audible.com offers the best customer experience, the widest content selection and the broadest device compatibility in the industry," said Steve Kessel, Amazon.com's senior vice president for worldwide digital media. "Working together, we can introduce more innovations and bring this format to an even wider audience."

Audible's Audio Assets

Audible has made a name for itself in the digital world by peddling digital audio editions of books, newspapers and magazines, television and radio programs and original programming. Its Web site, Audible.com offers more than 80,000 programs, including audiobooks from well-known authors such as Stephen King, Thomas Friedman and Jane Austen.

The company also offers spoken-word audio content from sources including The New York Times, The New Yorker, Fresh Air and Charlie Rose. Audible is a major provider of spoken-word audio products for Apple's iTunes Store. Content from Audible is downloaded and played on personal computers, CDs or AudibleReady computer-based and wireless mobile devices.

"Audible has done a good job. Audible has got some good licenses. The company is trusted by the publishers to avoid situations that would result in piracy of the content," said Phil Leigh, a senior analyst at Inside Digital Media. "But the problem is Audible is a small part of what people have on their iPods. Most people really want music."

The Kindle Factor

Amazon.com's recently introduced Kindle, a wireless portable reader that provides instant wireless downloads of more than 90,000 books, blogs, magazines and newspapers to a high-resolution electronic display, could be the difference maker for Audible.

"Amazon already sells Audible content, but now Amazon can be more aggressive about integrating the features into products like Kindle," Leigh said. "Amazon with Kindle has moved toward subscriptions. You can get the New York Times on Kindle. They may want to enlarge that to audible formats."

For Audible customers, the Amazon.com acquisition may mean better quality. Leigh expects the software to get better, as well as the delivery and compatibility with products like Kindle, iPod, iPhone and future Amazon.com products.

"One of the problems with Audible is it had a hard time coming up with enough money to make their software delivery bug-free," Leigh said. "The company gradually got the bugs worked out; it just took a long time. Amazon has the reputation that when they do something, they are going to do it right."

Amazon.com's Ideal Scenario

Amazon.com's acquisition of Audible takes the e-commerce giant one step closer to being a platform for digital merchandise. Leigh has been betting since the beginning that selling digital merchandise is Amazon.com's end goal.

Digital merchandise is ideal for Amazon.com, with no inventory to stock or returns to restock; no physical handling or physical shipment. That dramatically cuts costs, Leigh said, and gets the merchandise into the consumers' hands immediately.

"Digital media is the paragon type of merchandise that Amazon wants to sell. The Internet is just ideally suited to sell digital merchandise. For the preceding 10 years, Amazon built a reputation for customer service that is unequaled," he said. "As a result of that, now that digital merchandise is coming of age it's their opportunity to cash in."