Rhapsody acquires Napster, obtains all subscribers

By on October 3, 2011, 3:30 PM

Rhapsody has acquired music service Napster from Best Buy for an undisclosed sum. The company will obtain all of Napster’s subscribers and certain other assets while the retail electronics giant will be entitled to a minority stake in Rhapsody, says ZDnet.

The news was made official in a statement from Rhapsody president Jon Irwin.

“This is a ‘go big or go home’ business, so our focus is on sustainably growing the company. We’re excited to welcome Napster music fans to the best on-demand music experience anywhere. Our new members will have more places to connect to the music they love and to discover new favorites; guided by Rhapsody’s rockstar editorial team and the tastes of other Rhapsody members via our innovative social features.” 

Rhapsody was originally launched in December 2001 as the first streaming on-demand subscription service to offer music for a flat monthly fee. By mid 2002 the company had secured licensing rights to all of the major record labels at the time. The service was acquired by RealNetworks in 2003 where it operated under the parent company until 2010 when it separated from RealNetworks and lowered its monthly subscription rate.

Napster started life as one of the first peer-to-peer music-sharing services in 1999. The service reached enormous levels of success before coming under fire from several musicians and record labels. Napster shut down in July 2001 and eventually went bankrupt a year later and their brand and logos were acquired by Roxio. The brand operated under a subscription service for several years. In September 2008 Best Buy obtained Napster for $121 million in a move to provide DRM-free music downloads to compete against Amazon MP3 and Apple iTunes.

Rhapsody will obtain roughly 700,000 subscribers from Napster in an effort to strengthen their portfolio against rivals such as Spotify and Pandora. The deal is expected to be finalized by November 30.

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