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Rhapsody Buys Napster From Best Buy

4 Oct, 2011 By: Erik Gruenwedel

Sale underscores Best Buy’s downsizing of non-core businesses and the challenges of selling digital entertainment in a crowded market

Subscription music service Rhapsody said it has acquired majority interest in Napster, which is owned by consumer electronics retailer Best Buy.

Financial terms of the deal, which is expected to close in November, were not disclosed. Minneapolis-based Best Buy will retain a minority stake in Napster, which it acquired for $122 million in 2008.

That transaction laid the groundwork for Best Buy’s development of a digital platform and subsequent purchase of the CinemaNow brand and transactional video-on-demand service from Sonic Solutions.

Seattle-based Rhapsody charges $10 a month for access to more than 12 million songs. Napster, which operated a $5 monthly subscription service for PC-only access to music, will transition members to the more expensive platform on an opt-in basis.

“This deal will further extend Rhapsody’s lead over our competitors in the growing on-demand music market,” Jon Irwin, president of Rhapsody, said in a statement. “There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

Napster, which exploded in popularity as an illegal music file-sharing service more than 10 years ago before losing on copyright infringement charges to the record labels in court, was sold to Roxio in 2002.


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