Entertainment retailer Best Buy has announced a plan to buy online music service Napster for $121 million dollars. Napster, which is now a subscription service for downloading music, claims to have over 700,000 registered users using their digital program. While Best Buy currently does have a digital download store powered by Rhapsody, their aim in purchasing Napster is to become a fierce competitor with Apple and iTunes. Of the $121 million, $67 million will be used immediately for short- term investments. Aside from ownership, not much will change within Napster, as they have ensured that the employees will still hold their jobs at the Los Angeles-based company.
Their goal is to reach new customers with this subscription model and offer a new alternative to digital. A strong foothold in the digital realm is especially important if the major chain expects to remain dominant in the music market. Best Buy is one of the largest brick-and-mortar retailers of CDs, but that market is now steadily declining. Without a digital strategy, Best Buy will find itself left out in the cold over the coming years. By purchasing Napster, they are attempting to secure their place in the future music marketplace. The deal is expected to close by the end of the fourth quarter this year.
By Nicole Labrecque