AfterDawn: News

Best Buy acquires Napster

The retail giant Best Buy has announced the acquisition of Napster Online, the subscription music download service for $121 million USD in cash and investments.

The acquisiton values the music service company at about $2.65 USD a share, a 120 percent premium over its stock value at the bell on Friday.



Best Buy said the move was designed to have the retailer "reach new customers" while taking all of Napster's current 700,000 subscribers. The deal is expected to be completed by the end of this year.

"We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions," said Dave Morrish, an executive vice president of Best Buy.

Napster, a name once synonymous with the world of piracy and P2P networks, has completely reinvented itself over the past few years into an authorized, subscription-based online music store but has been struggling financially and recently reported a $16.5 million USD loss for the 2008 fiscal year.

Written by: Andre Yoskowitz @ 15 Sep 2008 13:57

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• 8 comments

• pensfan12

  why?
  What a waste of money!

  15.9.2008 18:38 #1

• salsa36

  Probably they haven't heard of ITunes.

  15.9.2008 19:27 #2

• mikecUSA

  I've been a Napster subscriber for years. I have a "crazy-large" 3 terabyte collection. I have literaly everything I ever dreamed of having.
  
  I used to have a huge Vinyl collection, but movihg place to place have lost stuff a buch.
  
  
  Then I began MY CD Phase in 1992 -which lasted til 2001. Then started converting my CD's to WAVs AND THEN coverted CD's and WAVs to MP3.
  
  Most of the music is DRM encrypted files, but I've also bought a lot of NON-DRM songs too.
  
  I could never find all the Metallica albums on CD or vinyl before , but this week I bought every single one, incuding their brand new album. All from Napster.
  
  
  I don't use I-Tunes, everything good is pretty much on Napster OR I already own it on CD.
  
  Napster is GRRRREAT!
  
  Especially with the ability to have a song but not necessarilly "own" my copy of it.
  
  The ones I like enought to OWN, I go ahead and BUY!
  
  I'm really glad Metallica has jumped on to the online distribution band wagon.
  
  For $12.00 a month (Less than 3 cups of Starbucks coffeee) I have the whole word of music at my fingertips.

  16.9.2008 02:01 #3

• SProdigy

  I've been a subscriber for a long time too. I really wish they wouldn't have moved away from WMA purchases, as I'm not a big fan of MP3 quality, nor the amount of space MP3's take up on a hard drive.
  
  However, for the "wise", you can amass a huge library of music rather quickly, and $12 a month is only the price of a CD or so, for a lot more music.
  
  The only annoying thing with Napster, is how they incorrectly tag some music, which may be the DB they get it from. An artist such as Aerosmith can show up as Rock, Pop, or Alternative. What's up with that?
  
  On the article, this is just a move by BBY to shut out other retailers (ie. Circuit City) from sharing in Napster's revenues. I imagine their partnership with RealNetworks' Rhapsody wasn't working the way they would've liked it to, and thus the purchase of Napster made sense.
  
  As for iTunes, Best Buy only carries iPods because it attracts customers into their store, especially to buy accessories or other things they can tack on. Best Buy has no way of making any real profit from an iPod sale, or iTunes gift card. If they can convince you to buy a Sansa or Creative player, and hook you into Napster, it gives them a continuous revenue stream.

  16.9.2008 10:51 #4

• DVDdoug

  They paid $170 per (current) customer for a company that lost $24 per customer last year.

  16.9.2008 15:02 #5

• JRude

  BestBuy would have been better off divvying up CircuitCity! At least some actual real estate to dump later, and bigger share of the walk-in store traffic.

  16.9.2008 16:29 #6

• nprfan

  Where's the FLAC? ;-)

  31.10.2008 12:58 #7

• sKrEwZ

  Another corporate take-over. I dropped Napster a while back. I don't really miss it too much.
  

  Sometimes a second chance is just the opportunity to kill something thats already injured.

  31.10.2008 13:19 #8