Jon Irwin in Rhapsody's downtown Seattle HQ.

Rhapsody’s acquisition of Napster from Best Buy gives the Seattle-based music service an opportunity to add a “meaningful” number of subscribers to its customer base, says Rhapsody’s president, Jon Irwin, weighing in on a deal that surprised the tech industry when it was announced earlier today.

Speaking via phone with GeekWire this afternoon, Irwin downplayed the threat from Spotify’s U.S. launch and said the Napster deal is consistent with Rhapsody’s strategy of making select acquisitions and striking strategic partnerships, such as its recent deal to offer its music service to MetroPCS subscribers.

Financial terms of the deal weren’t disclosed. Irwin said it was an all-equity deal, with Best Buy trading the Napster assets for a minority stake in Rhapsody. Best Buy gets to keep a foot in the door of the streaming music industry, with an ownership interest that complements its retail sales of music devices.

At the time of Best Buy’s 2008 acquisition, Napster said it had 700,000 subscribers, according to CNet, which broke the news of Rhapsody’s Napster acquisition earlier today. Rhapsody has more than 800,000 subscribers, up from 700,000 prior to its spin-off from RealNetworks last year.

Rhapsody isn’t confirming how many subscribers Napster has today, but Irwin said Rhaposdy considers Napster its nearest competitor. Rhapsody will be seeking to convert as many of those users as possible into paying Rhapsody subscribers after the deal closes, scheduled for late November.

“We’re excited about the growth that it’s going to bring to the overall Rhapsody base,” he said. “We’ve got a lot of wind in our sails.”

That outlook might be a surprise to some following the U.S. launch of the European music service Spotify and its popular free version, in addition to a subscription service that competes directly with Rhapsody. But Irwin said Spotify could actually be a positive for Rhapsody, by bringing more attention to on-demand music service. He pointed out that Spotify’s free version is a limited experience, without the ability to play songs on a mobile device.

“It’s like taking Mick Jagger out of the Rolling Stones if you don’t have mobile in your on-demand music experience,” Irwin said. “It’s that important.”

Earlier on GeekWire: Breaking: Rhapsody to buy Napster from Best Buy

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  • Nick Webb

    Great to hear, I hope Rhapsody makes it big.  I love it.  Mobile/portable support is huge, and Spotify just isn’t there (as I download Spotify to try it out…).

    • Todd Bishop

      Thanks for the comment, Nick. Will be curious to hear what you think of Spotify.

      Just to be clear, premium versions of Spotify do have mobile access, but the big question has been whether its free version will take a bite out of Rhapsody. This was Irwin’s response to that. 

      • Nick Webb

        Todd, you are right.  However, I have a portable sansa device that Rhapsody supports and apparently Spotify does not (only supports mobile and iPod).

        That’s understandable, though, I’d support mobiles and iPods before anything else if I ran Spotify.At first look, Spotify is sleek.

    • CCNative

      You clearly never used Napster in order to compare.  Read my comment above.

  • CCNative

    I left Rhapsody about 3 years ago because it was crap.  After 3 consecutive “upgrades”, Rhapsody lost my entire library each time.  Their incompetent out-sourced “customer service” were rude and arrogant and did nothing to fix the problems.

    I left Rhapsody and went to Napster and found a FAR SUPERIOR SERVICE and INTERFACE with NAPSTER and now I have been thrown back in time to a horrible Rhapsody experience.

    I strongly suggest that you get your butt in gear, Rhapsody, because if you don’t improve your SERVICE, SOUND-QUALITY and INTERFACE SOON, you will be losing MANY subscribers, including me!

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