Tech & Biz

Best Buy(s) Napster for $121 Million

by Jarrett Martineau | September 15, 2008 at 11:21 am

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American retail giant Best Buy has acquired the (fl)ailing web music service Napster for a cool $121 million.

I'm still trying to figure out if this is a good thing for either company. To some extent, it will save Napster from spiralling completely into online obscurity, and it will give Best Buy access to Napster's technologies and 700,000 subscribers, but will it buoy either brand in a current business climate that places iTunes firmly ahead of all other competitors?

The retail chain Best Buy says it will buy the ailing online music service Napster for $121 million -- about twice the price at which the stock market had valued the company. Napster shares closed on Friday at $1.36, but Best Buy agreed to pay nearly twice that: $2.65.
Napster stock had plummeted 95 percent over the past six years, causing JDS Capital Management to proclaim that Napster was worth more dead than alive and some larger investors to revolt against the Napster board and demand that they be put in charge. It looks like their worries, to a certain extent, are over. Napster's board agreed unanimously to the merger.

But what exactly is Best Buy acquiring?

In case you need a refresher on what Napster actually does these days, it's important to recognize that the service abandoned Microsoft's DRM in its music store, and now sells unrestricted MP3s. However, it must continue applying Microsoft DRM to its catalog of subscription files, access to which starts at $13 per month. In addition, its free.napster.com site allows people to stream and e-mail on-demand tracks for free.

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Apply-Credit-Card (not verified)

at 14:16 on November 11th, 2008

Very good story, I would like to see what Best Buy is planning to do with Napster. Probably product tie-ins. I'm not sure if this is a good idea profit-wise though, but they are already raking in the dough with the Best Buy credit card.