Seattle-based online music service Rhapsody has announced today that it’s in the process of purchasing the once dominant music file sharing company Napster. Under the terms of the deal, Rhapsody will take over Napster’s subscriber base and other assets, and Best Buy, who purchased Napster for a reported $121 million in 2008, will get a minority stake in Rhapsody. The specific financial details haven’t been disclosed yet. According to the press release, all parties expect final details of the purchase to be worked out around November.
What’s clear here is that Best Buy is waking up and no longer feels that Napster represents the future of music like it once did. It’s surprising that they were suckered into spending that kind of cash on a fledgling peer to peer music service amidst the recession of 2008. Then again, big box retailers are rarely quick to recognize what consumers already know.
Personally, it seems that Rhapsody is taking a gamble as well in their efforts to outmaneuver some of the new players in online music streaming such as Rdio, Spotify, and MOG. Rhapsody was ahead of it’s time years ago in trying to convince the industry that music streaming was the future. As Greg Sandoval at CNET points out, here in 2011, every major online player you can think of is banking their future on streaming and cloud services. Rhapsody clearly has a history of knowing what it’s doing. Right now, they want, or realistically, need more subscribers to remain competitive. I’m just not convinced Napster users (all 700,000 of them — if that) constitute a considerable power move for Rhapsody.
This might have been front page news several years ago, yet today, the Yahoo News/ABC News merger announced this morning is generating far more buzz. I like Rhapsody’s strategy of not sitting still. Maybe I’m the only one that isn’t convinced Napster is even significant.