American electronics and entertainment retailer Best Buy will purchase online music subscription service Napster for nearly $US127 million, in an attempt to increase its digital music sales.
American electronics and entertainment retailer Best Buy will purchase online music subscription service Napster for nearly $US127 million, in an attempt to increase its digital music sales.
“Best Buy believes that Napster has one of the most comprehensive and easy-to-use music offerings in the industry, including streaming music, music subscriptions, the ability to purchase individual tracks, albums and mobile offers,” the company said in a statement.
Best Buy will pay $US2.65 per share for Napster, which recorded a $US4.4 million loss last month. But news of the deal helped the company’s shares jump from $US1.36 to $US2.53.
Best Buy’s executive vice president for connected digital solutions Dave Morrish says the acquisition is an exciting step forward for both companies.
“We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions,” he says.
“Over time we hope to strengthen our offerings to consumers, who we believe will increasingly seek devices and solutions that enable them to access their content wherever, whenever and however they want.”
Chris Gorog, CEO of Napster agrees. “We believe Best Buy will be an ideal partner for Napster and are very excited by the benefits that this transaction delivers to our shareholders, partners and employees.”
Napster was created by Shawn Fanning while he was attending Northeastern University in Boston. Popular among university students, it was one of the first peer-to-peer file-sharing services to become an internet phenomenon, allowing users to download individual music files for free.
The service was sued by several American record labels and was found guilty of directly infringing copyright laws.
After legal battles with the Recording Industry Association of America, Napster shut down its servers in December 1999. In order to pay for a $US26 million settlement, it began charging users for a subscription service.
Read more on file sharing and copyright
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