Bloomberg News

Rhapsody to Acquire Best Buy’s Napster Subscribers, Assets

October 03, 2011

(Adds analyst’s comment in fourth paragraph.)

Oct. 3 (Bloomberg) -- Rhapsody International Inc., the Internet music service, said it will acquire the subscribers and other assets of rival Napster, a unit of Best Buy Co.

Best Buy, the world’s biggest consumer electronics retailer, will get a minority stake in Rhapsody in the deal, which is expected to close around Nov. 30, the companies said today in a statement. Rhapsody, a joint venture of RealNetworks Inc. and Viacom Inc.’s MTV Networks, was spun off as an independent company last year.

Rhapsody, based in Seattle, charges subscribers a fee to listen to more than 13 million songs. Napster, which started in 1999 as a free music-swapping website, offers a paid music service and was acquired by Best Buy in 2008. With the U.S. debut of popular European music service Spotify Ltd., Rhapsody may be looking to add subscribers, said Mark Mulligan, an industry analyst at Forrester Research Inc. in London.

“It’s a great way to suddenly make Rhapsody the No. 1 music subscription service in the U.S. in the face of Spotify getting close,” he said. “My hope for Rhapsody would be that they use this as a platform for reinventing themselves rather than simply just trying to carry on with the same old product strategies.”

Mulligan estimates Napster has around 400,000 to 500,000 subscribers. Rhapsody reported more than 800,000 subscribers in July.

--Editors: Niamh Ring, James Callan

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net


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