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Rhapsody buys Napster subscribers from Best Buy

Mon, 10/03/2011 - 3:05pm
The Associated Press

Electronics retailer Best Buy Inc. is tuning out of Napster, a digital music service that has struggled to evolve from its renegade origins as a free file-sharing network that riled the recording industry.

Napster's subscribers and other assets will be sold to another digital music service, Rhapsody, as part of a deal announced Monday.

Best Buy will get an undisclosed stake in Rhapsody after the swap is completed. The exchange is expected to be completed by end of November.

The deal ends Best Buy's efforts to groom Napster into a brand that would have broad appeal to shoppers buying mobile phones and computers at its nearly 1,400 stores. Best Buy, which is based in Richfield, Minn., bought Napster for $122 million in cash in October 2008.

Since then, other music services, such as Internet radio station Pandora Media Inc. and Spotify, have emerged as more popular channels.

After starting out as a dorm-room project in the late 1990s, Napster morphed into a notorious outlet for people looking to get free music. Recording artists and studios launched a legal crusade that eventually crippled Napster. Gadget maker Roxio Inc. bought Napster's name and other intellectual property in a 2002 bankruptcy auction. Roxio revived Napster as a subscription service and eventually adopted the Napster name as its corporate identity.

Rhapsody, which is based in Seattle, has gone through its ups and downs, too, since it started in 1999 as Listen.com. The service was spun off as a separate entity last year by its previous owners, RealNetworks Inc. and Viacom Inc.'s MTV Networks. Rhapsody's monthly subscriptions start at $10 per month for access to a library of more than 12 million songs.

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