Rhapsody, one of the oldest Web subscription music services, has made it official. The company has acquired Napster subscribers and other assets from Best Buy, while the electronics retailer will obtain a minority stake in Rhapsody, the companies said today.
In a deal first reported by CNET, the acquisition is expected to close on November 30, the companies said in a press release. Best Buy appears to be unloading a music service that struggled prior to being acquired by the merchant and seemed only to have disappear after.
The financial terms of the deal were not fully disclosed. Nonetheless, it doesn't appear that Best Buy's investment in Napster paid off.
In 2008, Best Buy acquired the revamped Napster music service, which enabled the electronics retailer to enter into the online music sector.
Napster began as the pioneer file-sharing service. The company enabled users to share songs with each other via the Web. Lawsuits filed by record companies toppled the company and the brand and trademark were eventually sold. A subscription service hobbled along under the Napster name for years.
Three years ago, Best Buy launched an all-cash tender offer for outstanding Napster shares at $2.65 apiece, with the full acquisition valued at $121 million. That total value represented $54 million net of approximately $67 million in cash and short-term investments.
At the time of Best Buy's acquisition, Napster said it counted 700,000 subscribers. It is unclear how many the company has now but presumably, Rhapsody is acquiring some new customers.
As for Rhapsody, this is a company that appears to be years ahead of its time. The company spent much of the past decade trying to get consumers interested in subscription music services. Now, the entire music industry is trying to make that business model work.
Rhapsody was owned in party by RealNetworks and Viacom, but those companies spun off the service in April 2010. Since then, Rhapsody managers have tried to prevent upstart all-you-can-eat services from taking all the glory. Spotify, MOG, and other digital music services also charge a monthly fee for premium services.
Update 11 a.m. PT: to confirm that the deal CNET had reported was about to be announced actually was and to include the company's statement.