Music subscription service Rhapsody has signed an agreement to acquire Napster from parent company Best Buy for an undisclosed sum. Best Buy gets a minority stake in Rhapsody, which was launched in 2001. Rhapsody gets Napster subscribers and assets as part of the deal, which is expected to close on Nov. 30.
What isn't known yet is whether the Napster name itself will go away. But from the tone of the announcement, it seems Napster subscribers and intellectual property may be folded into Rhapsody. "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," Rhapsody president Jon Irwin said. "This is a 'go big or go home' business, so our focus is on sustainably growing the company."
Rhapsody reported a subscriber base of more than 800,000 paying customers in July. Napster had 700,000 subscribers when it was acquired by Best Buy, but it is unknown how many subscribers Rhapsody will gain through the acquisition. The company hopes to compete with Spotify, the newer and trendier European streaming service which already has more than 2 million paying subscribers.
Until now, Napster has stuck around in name only. The former peer-to-peer music sharing network, launched in 1999, was first shut down in 2001. It reopened after Bertlesmann AG stepped in with an $8 million offer. Best Buy then purchased the company in 2008 for $121 million.