RSSNapster to be absorbed into Best Buy in $121 million deal
By Scott M. Fulton, III | Published September 15, 2008, 12:24 PM
A filing with the US Securities and Exchange Commission yesterday confirms that retailer Best Buy has entered into a deal to completely purchase online music service Napster, for $121 million including $54 million up front.
According to the SEC filing (HTML copy available here), Napster will have 20 days to reach a firm decision on the deal, although a definitive merger plan has already been agreed upon. Conceivably, opposing bids could be considered during that time, assuming any are forthcoming.
Best Buy's statement this morning makes it clear that the retailer would be acquiring Napster's subscriber base of 700,000, its Web-based customer service, and its mobile technology. No other technology is listed as being part of the deal -- a clear indication that the P2P platform that once defined Napster is no longer of value.
Today's deal could spell the end of a weird, wild ride for both parties. Two years ago, Best Buy entered into a partnership with RealNetworks, which made Rhapsody available on MP3 players sold and serviced through Best Buy, including Sansa models. That deal came about after Best Buy split from its former partner Roxio, which in 2004 had been the first to purchase the Napster brand, and try to convert it from a P2P free-for-all into a legal download service. Yesterday's SEC filing made no mention of RealNetworks, so the fate of that deal today is uncertain.
Last May, Napster reported that its long downward spiral may have at last come to an end, with its new mobile service having contributed to a spike in revenues and an unexpected surge in subscribers. Two years ago, Napster's subscriber base had reached a low of 512,000.
It's a big name and name recognition (even if negative) means a lot. However they're way way overpaying for it. The service has sucked ever since it went legit.
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Yup, name recognition, even if tinged with negative association, are always a positive thing in product marketing!???
I think you are mistaking exposure with promotion resulting in increased sales! Looking for any OJ Simpson golf apparel or equipment lately, are we?
This reminds me of GM's marketing of the Chevy Nova in Latin America - where Nova - a trendy name in the US - means 'no go' - or 'it doesn't go' in Spanish!
Yup, no matter the name association, its trendy, right?
LOL!
About the only folks that don't have a negative connotation attached to Napster are those completely unaware of it - and that is not exactly a productive segment of the market!
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Best Buy and Napster? Do the execs at Best Buy ever go on the internet? What could they possibly do to make Napster a success? and don't even think about toppling iTunes. Best Buy doesn't even know the service industry! If they couldn't find a company closer to their line of business for 121 million dollars, it's time to retire.
And to think people get paid to make decisions like this.
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Best Buy's selection of music is no better than WalMart's. 3/4 of their catalog consists of nothing more than greatest hits compilations rather than actual titles. And their prices are higher than other locations which renders it useful only for impulse buys. So why even bother looking?
MUCH MORE information needs to be presented for us to even have a clue as to the value of this deal!
But I doubt that the investment can be recovered in a foreseeable future, and without a coherent plan for exactly how they plan to effectively compete with the major established players with better reputations, I have serious questions about the financial viability of this deal.
But then again, with my low estimation of Best Buy as anything other than a mediocre outlet for anything other than appliances and TVs, the merger simply reinforces that reputation as the merge with an online service NOT known for quality and with a name recognition built upon questionable P2P file sharing and as a source of malware infections. Thus the Napster name is counterproductive to growing their business.
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Best Buy and all other stores that still sell CD's have been taken a beating in music sales. It's a smart move but does anyone actually buy music from Napster?
We all know iTunes is the 400lb gorilla. Amazon does pretty well with music sales too.
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yeah I know, I totally forgot they existed.
I have a love hate thing with tunes. I like how they changed the dinosaur music industry but that's about it.
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