Best Buy Acquires Napster: But Why?

by admin September 15, 2008 at 8:30 pm

Electronics retailer Best Buy today announced that it plans to acquire music retailer Napster for $121 Million. According to the Wall Street Journal, the deal values Napster at $2.65 a share, almost double its closing price on Friday. However, while Napster was a major success story when its name was still synonymous with illegal P2P file sharing, it never quite caught on with users after it turned into a legitimate business. Judging from the press release, Best Buy is mostly interested in Napster’s mobile business, where, with the help of Best Buy’s marketing power, the company might just be able to create a profitable niche for itself.

Users never really warmed up to music subscription services. Napster, for example, only had about 700.000 subscribers and, according to a recent report by Jupiter Research, its subscriber numbers have actually been falling. Most consumers still prefer to own their music, even though subscription services, with their all-you-can-eat plans, often offer a good value for those who tend to have a high turnover in their music collection. In May, Napster started selling DRM-free MP3s, but judging from this sudden sale of the company, few users must have chosen Napster over Amazon’s MP3 store or Apple’s iTunes.

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