Patterico's Pontifications

9/15/2008

Best Buy Acquires Napster

Filed under: General — DRJ @ 7:26 pm



[Guest post by DRJ]

This seems like a good pairing:

“Napster Inc. (NAPS) (NAPS), the online music community that rose from a dorm room project to became the scourge of the global recording industry, is being purchased by Best Buy Inc. for nearly $127 million as the electronics retailer tries to boost its digital music business.

The $2.65 per share all-cash deal announced Monday is nearly double the music network’s Friday closing price but a small sum to pay for Best Buy, which gets access to Napster’s 700,000 subscribers who pay a monthly fee to access digital music catalogs.

“It’s not a huge investment, but it definitely has brand recognition,” said Morningstar analyst Brady Lemos, who said Best Buy also benefits from the acquisition of technical expertise about the digital music industry.”

Analysts seem to like it, too. It enables Best Buy to compete with Apple’s iTunes with an established brand.

— DRJ

30 Responses to “Best Buy Acquires Napster”

  1. Just curious.

    When you say “this seems like a good pairing”.

    To whom do you refer?

    Consumers? Best Buy shareholders? Napster shareholders? All of the above?

    I’ll be honest that I don’t yet have any idea of what it means other than some money changed hands.

    jharp (f4bed7)

  2. Napster + Best Buy = Good pairing.

    Got it?

    DRJ (7568a2)

  3. The pairing would be Best Buy and Napster. Since there is nothing else being paired, there is no other possible answer except for the obvious one. What it means ‘other than some money changing hands’ is that Best Buy has made a preemptive move in advance of the demise of the rapidly-declining CD format, in order to maintain a significant share of the music sales market. That part should be obvious as well.

    And now, armed with the truth, do your best to spin it “jharp style”.

    Icy Truth (7b38bb)

  4. Why?

    And you seem to be a nice person.

    I’d say it might be good for all three and bad for Apple.

    But it very well might not be good for consumers.

    I was only curious and felt I asked an honest straightforward question.

    jharp (f4bed7)

  5. I was only curious and felt I asked an honest straightforward question.

    You are a noisemaking moron of whom everybody is sick of.

    nk (189a81)

  6. I was only curious and felt I asked an honest straightforward question.

    You are a noisemaking moron of whom everybody is sick of.

    Comment by nk — 9/15/2008 @ 7:46 pm

    Good input to the thread. I’m reporting you to Patterico.

    And my two cents after a brief study.

    Sweet, sweet deal for the Napster shareholders.

    If I was a Best Buyer shareholder I don’t think I’d care for the deal.

    Only time will tell.

    jharp (f4bed7)

  7. And just for fun: Best Buy + Rapster = good pairing. Love this rap. Title’s a perfect fit too. First guy’s the best; hold out for the Geek Squad at the end.

    no one you know (1ebbb1)

  8. Good pairing? only for the Apple haters. Napster hasn’t been a “brand” since the court shut them down in 2001. Their subscription service has been losing almost 10,000 customers a month over the last year, and none of the [college] kids use it. OK, it may be good for the Napster shareholders, too, but it’s rapidly going the way of Yahoo’s music service and Rhapsody…

    I’m a management professor, fwiw, and I can’t figure out the business logic behind it.

    Aron (830bcc)

  9. “I’m a management professor, fwiw, and I can’t figure out the business logic behind it.”

    Nor can I but I can confirm the retail business sucks really really bad now.

    And I believe the big hitters have grave concerns about the infrastructure they have sunk tens of billions of dollars into that they intend to recoup with business as usual.

    jharp (f4bed7)

  10. I like Best Buy, but Napster long ago lost any relevance to online music. Its only claim to fame was free music, which the courts also determined was illegal music. Napster was purchased, then turned into a DRM-impaired shell of itself, while trading on its original “rebel” image. Now Napster also sells MP3s, but those were already available from eMusic, Amazon.com, etc.

    And, I just checked Napster’s home page, and it blared sound out of my PC speakers! Classless and clueless as always, that’s Napster. I hope Best Buy at least turns off the annoying “welcome” sound.

    Bradley J. Fikes (0ea407)

  11. jharp –

    Why?
    — Because spinning things jharp-style is just what you do.

    And you seem to be a nice person.
    — Thank you. I’m more of a good person than a nice person, but I’m always one to take a compliment with appreciation.

    I’d say it might be good for all three and bad for Apple.
    — It may well be bad for Apple, as Best Buy could reinvigorate Napster; however, there seems to be room in the market.

    But it very well might not be good for consumers.
    — Is there a reason why you think that might be the case?

    I was only curious and felt I asked an honest straightforward question.
    — Sorry for the blunt reaction, but your reputation precedes you.

    Icy Truth (fa927f)

  12. And you seem to be a nice person.
    – Thank you. I’m more of a good person than a nice person, but I’m always one to take a compliment with appreciation.

    I was referring to DRJ but what the hell, you’re OK too.

    “But it very well might not be good for consumers.
    – Is there a reason why you think that might be the case?”

    It has been my experience that buyouts are usually to create monopolies or oligopolies that are generally bad for consumers.

    In this particular case I have too little information to form an opinion.

    One thing is clear. It is too early too tell.

    jharp (f4bed7)

  13. When I want to buy a track for one of my non-iPods, I, in preference order:
    Check for it on the Wal-Mart music downloads site, both because moonbats hate Wal-Mart but also they’re the one seller I’ve found that doesn’t universally refuse to sell individual tracks that exceed 9 minutes in length,
    Check for it on Napster because it’s not Apple (I have to use Windows, Linux, Solaris and Mac OS at work and I hate the Mac),
    Check for it on Amazon.
    If I find what I’m looking for, I use the cheaper option. For a last resort, I’ll check iTunes, but then I more than likely end up with some proprietary crap that I have to rerecord to make an MP3.

    Dave (d51df8)

  14. I was referring to DRJ but what the hell, you’re OK too.
    — I am? How much wine have you had tonight?

    It has been my experience that buyouts are usually to create monopolies or oligopolies that are generally bad for consumers.
    — Like I said, I think Best Buy has seen the writing on the wall when it comes to CD sales, and they’re investing in online music in an effort to maintain their overall sales numbers.

    Icy Truth (fa927f)

  15. It has been my experience that buyouts are usually to create monopolies or oligopolies that are generally bad for consumers.

    In this particular case I have too little information to form an opinion.

    One thing is clear. It is too early too tell.

    Noisemaking moron with nothing to say who says it anyway.

    nk (189a81)

  16. jharp and aron,

    You’re right that time will tell whether this is a profitable pairing. Some of the best-appearing ideas fade away while others surprise us with their staying power.

    I think this is a good pairing because it helps Best Buy expand its potential sales of digital music and related peripherals to a targeted group of consumers who don’t exclusively use iTunes. Will it be the biggest product of the decade? No, but that doesn’t make it a bad idea.

    aron, you’re the marketing professor. Don’t businesses like Best Buy make money from getting people in the door where they may make other big ticket purchases? Is it possible this helps Best Buy in that area?

    DRJ (7568a2)

  17. aron, you’re the marketing professor.

    management professor

    Don’t businesses like Best Buy make money from getting people in the door where they may make other big ticket purchases? Is it possible this helps Best Buy in that area?

    Maybe so. Best buy makes money from selling things at a profit. Generally the big ticket items are the draw to sell less expensive more profitable items.

    But, one way or another you must get people in the store and do some business at a profit.

    Who knows maybe drawing customers in with low end items will build big ticket item sales.

    Sounds like it’s worth a try to me.

    One thing is clear. Best Buy needs to draw customers in one way or another.

    jharp (f4bed7)

  18. Thanks for the correction re: aron’s specialty, jharp. And from the article, it sounds like Best Buy is hoping for more sales of digital peripherals like headphones. Sales of big ticket items may be remote but if you’ve only paid $171 per subscriber as opposed to $5000 each, you don’t have to sell near as many big ticket items to those new customers to recoup your expense.

    DRJ (7568a2)

  19. DRJ,

    You are welcome. And it was you who I referred to as a nice person.

    Interesting little business discussion.

    And though I do credit Best Buy for trying and it very well might turn out well.

    I have my doubts.

    jharp (f4bed7)

  20. Jeez, I was kidding! I know you were referring to DRJ. She is a nice person.

    Icy Truth (7b38bb)

  21. Let’s all join hands and sing Kumbayah.

    And I mean that in the best possible way.

    DRJ (7568a2)

  22. As long as we’re talking music, Pink Floyd keyboardist Richard Wright died today.

    Icy Truth (7b38bb)

  23. Let’s all join hands and sing Kumbayah.

    I’m sorry, but this is election season, and this thread does not contain the requisite level of hate.

    This time it’s a warning. Next time you’ll all be cited.

    Apogee (366e8b)

  24. Let’s all join hands and sing Kumbayah.

    The UCLA will be contacting you shortly for your attempt to force your religion on me.

    :)

    Scott Jacobs (d3a6ec)

  25. I’m sorry, but this is election season, and this thread does not contain the requisite level of hate.

    Thank you for setting things straight.

    I had only screamed in anger once the entire thread!

    highpockets (5dbd59)

  26. #25 – No they won’t. USC will kick their ass if they try anything like that.

    Apogee (366e8b)

  27. ACLU. Damnit…

    Total failsause…

    Scott Jacobs (d3a6ec)

  28. It was funnier as UCLA.

    Icy Truth (7b38bb)

  29. failsause: ewww

    KatAttack (edae44)


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