Rhapsody, the Seattle-based music service that spun out of RealNetworks last year, will buy venerable music service Napster from retailer Best Buy under an agreement just announced by the companies. No purchase price was disclosed.

The agreement calls for Rhapsody to acquire Napster’s subscribers and “certain other assets,” and Best Buy will get a minority stake in Rhapsody, according to the company.

The acquisition is expected to close around Nov. 30.

“This deal will further extend Rhapsody’s lead over our competitors in the growing on-demand music market,” said Jon Irwin, Rhapsody president, in a news release from the company. “There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

Rhapsody, facing increased competition from Spotify and other music upstarts, has more than 800,000 subscribers. A spokeswoman says the company isn’t disclosing Napster’s subscriber figures until it shifts them to Rhapsody, when it will issue a revised number.

The company says the Napster brand will “sunset,” but Rhapsody will retain the Napster intellectual property, and it may carry over internationally.

The original Napster was a lightning rod of the digital music revolution, as a peer-to-peer file-sharing network that drew the ire of the music labels and was ultimately shut down over copyright allegations. The brand was later reborn as a paid subscription service.

Napster was acquired by Best Buy for $121 million in 2008, or $54 million after subtracting Napster’s cash and short-term investments.

CNet News.com broke the news of the acquisition by Rhapsody today shortly before the official announcement.

Follow-up: Rhapsody president on surprise Napster acquisition: ‘We’ve got a lot of wind in our sails’

Comments

  • Guest

    Napster and Rhapsody are very different, of course. One’s a forgotten relic that most customers would be shocked to know still exists as a paid service, and the other one’s Napster!

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