Best Buy acquires Napster for $121 mil

But does anyone care?


Cyrus Farivar
September 15, 2008 8:37PM (UTC)

Amid all the financial meltdown hitting Wall Street Monday, one company has done pretty well for itself: Napster. Best Buy just dropped $121 million for the current incarnation of what once was the most disruptive force in music.

I'm not really sure which is more surprising -- that Napster still exists or that even a stodgy company like Best Buy would think to buy it.

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This is a company that has a paltry 700,000 subscribers, has 140 employees, and by its own admission lost $16.5 million last year. (To be fair, the year before, it lost $36.8 million.) By comparison among subscription-based services, Yahoo/Rhapsody has nearly 3 million subscribers.

Meanwhile, as Macworld's Philip Michaels points out, Apple has become king of the hill. Not just in digital music but in all retail music, period.

A little less than four years ago, I sat in a hotel ballroom just outside Hollywood listening to a steady parade of record executives and online retailers predict doom -- or at least, short-lived success -- for Apple's a la carte approach to selling music. Subscription services -- that was where things were at, speakers at the 2004 Music 2.0 conference agreed, and Apple could either get on board or watch helplessly as its spot as the No. 1 online music retailer was usurped by subscription-based upstarts.

Well, Apple has more or less stuck to its 99-cent-per-track worldview. And now it’s the top music retailer in the U.S., topping even Wal-Mart. So obviously, not having a subscription-based service has been disastrous for Apple -- so long as "disastrous" also means "financially remunerative."

Of course, this Napster isn't the same as the one of old, the one that got popular just as I got to college. You know, the one that rocked and shocked the music and tech worlds by releasing the first majorly rambunctious music-sharing peer-to-peer software by the same name. Not surprisingly, it got shut down in various lawsuits, ending conclusively in 2001. Shortly afterward, Roxio bought the Napster brand, logo and other assets for $5.3 million and used it in 2003 to relaunch a now legal Napster. Since then, it's tried to compete with the already crowded marketplace for attention and subscribers. It hasn't done too well with either.

Meanwhile, Shawn Fanning (the man from whence the Napster moniker originated), after a failed attempt at another legal music right clearinghouse company, Snocap, is now busy at work on another company, Rupture. A complete departure from the music world, Rupture is basically a social networking site for video games across all platforms.

Maybe getting out of the music business is the smart move after all.


Cyrus Farivar

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