Rhapsody to acquire Napster (scoop)
Rhapsody, one of the older subscription music services, has now made it official. The company has acquired Napster subscribers and other assets from Best Buy, the companies said today. In a deal that CNET first reported, Rhapsody has acquired Napster's subscribers …
Context & Ripple Effects
Napster has changed hands again: Rhapsody, itself one of the oldest names in subscription music, is taking on Napster's subscribers and other assets from Best Buy. The deal closes a chapter that began when Best Buy took control of the service — a transition rocky enough that Napster warned subscribers in early 2009 that Best Buy would gain access to all their account data unless they cancelled by February 17 (that subscriber-data warning).
For Best Buy, the sale lands amid a broader retrenchment: the retailer has spent recent weeks cutting holiday-season temp hiring nearly in half versus 2010 and discounting tablets hard, even as it talks up its broadband-linked 'Connected World' vision. Shedding a digital music service reads as focus, or as retreat, depending on which of those signals you weight more.
First-order effects
- Rhapsody immediately absorbs Napster's paying subscriber base and assets, consolidating two of the longest-running US subscription music services under one operator.
- Best Buy exits the consumer music-subscription business entirely, handing off a service whose customer relationships it had already strained with the 2009 data-access controversy.
Second-order effects
- Rivals in subscription streaming face a larger consolidated Rhapsody competing on catalog and subscriber scale rather than brand nostalgia, pressuring smaller independent services on pricing and licensing leverage.
- For Best Buy, divesting digital services narrows its 'Connected World' pitch to hardware and connectivity, just as weak tablet demand — hinted at by the discounted PlayBook inventory — squeezes the retail side it is doubling down on.
Third-order effects
- The deal extends a pattern dating back to Napster's original disruption of the labels: iconic music brands becoming transferable assets, valued for their subscriber lists and name recognition more than for any underlying technology.
- If general retailers keep exiting digital content services, music subscriptions consolidate around dedicated operators — a structure that favors scale players negotiating directly with the labels Napster's arrival first forced to the table.
The trend: Digital music subscriptions are consolidating away from general retailers toward dedicated streaming specialists, with legacy brands like Napster traded as subscriber bases rather than businesses.