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Best Buy Coughs Up $54 Million For Napster 164

Posted by ScuttleMonkey
from the so-i-heard-you-got-robbed dept.
MarketWatch reports that Best Buy has decided to toss $54 million into an acquisition of Napster. All told, the deal amounts to around $121 million, with about $67 million headed towards getting cash and short-term investments from Napster's balance sheet. "The deal will give Best Buy an online digital music retail outlet as well as a subscription streaming service that has about 700,000 subscribers. That could help Best Buy to compete against retail giant Wal-Mart, which has its own online digital music offering."
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Best Buy Coughs Up $54 Million For Napster

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  • by Anonymous Coward on Monday September 15, 2008 @11:31AM (#25012027)

    Good work, Best Buy. That takes effort.

  • Just a name... (Score:4, Interesting)

    by religious freak (1005821) on Monday September 15, 2008 @11:34AM (#25012069)
    $54 million for just a name? Sounds a little high to me.
    • by jep77 (1357465) on Monday September 15, 2008 @11:36AM (#25012129) Homepage
      Well it was either that or buy naming rights for a stadium. They may have made the wrong choice.
    • by gstoddart (321705)

      $54 million for just a name? Sounds a little high to me.

      I must say, I had more or less the same reacion. So, this says all things considered, they're spending about $121 million for Napster.

      What, exactly, are they getting for this? Sure, Napster is a well known name, but so are Edsel and New Coke. ;-)

      Does anyone have any insight into what about Napster in its current state (or any other) that actually makes any sense whatsoever to spend this kind of money?

      I just don't see it.

      Cheers

      • by Karlt1 (231423)

        I must say, I had more or less the same reacion. So, this says all things considered, they're spending about $121 million for Napster.

        Napster has $67 million in cash and no debt. So while Best Buy is actually paying $121 million for Napster, they also get the $67 Million in cash -- that's where the $54 million fogure came from.

        • Sounds like a great deal!

          Hey BestBuy, listen up:

          I'm the exclusive rights-holder of the globally established trademarks "drm-infested-music.com" and (related) "dim-executives.com".
          We both know that your brand-portfolio will never be complete without them, therefore I will (reluctantly) agree to sell it to you for the unbeatable (discounted, all-inclusive, wholesale, excl. tax) price of only 100 million US-dollars.

          In order to make the deal more attractive to your shareholders I hereby agree that we pretend I'

        • Best Buy, you want to buy my 67 cents and old, skid stained underwear for $1.21? You can wash and re-use the underwear. Fantastic!!
    • by BPPG (1181851)

      Not just the name, but the existing subscribers too. Or at least, the existing subscribers that don't care about who owns napster.

      When you're talking music industry, your primary commodity is not the music, it's the people.

    • Seriously, it IS just a name. Napster hasn't been worth anything since it stopped being a p2p filesharing network...well, scratch that...the name 'napster' is worth whatever people will pay for it, in a sense...

      I have no idea how Best Buy financial analysts could think that "napster" is work that much.

      It's deals like this that explain why US business is doing so poorly

    • $54 million for just a name? Sounds a little high to me.

      Oh c'mon. Who hasn't done something stupid when they were high?
  • by Anonymous Coward on Monday September 15, 2008 @11:34AM (#25012073)

    That's a lot of Monster Cable money your bosses just threw away. Betcha they didn't buy a warranty, either.

  • by Darundal (891860) on Monday September 15, 2008 @11:34AM (#25012077) Journal
    ...how this wasn't a giant waste of cash and a sign that Best Buy is run by PHBs? Honestly, I understand the reasoning (online is where music distribution is, at this point, which cuts into their bottom line), but the Napster brand is, at least last I knew, pretty much useless as a brand. If I am wrong, someone please correct me.
    • by garcia (6573) on Monday September 15, 2008 @11:42AM (#25012231) Homepage

      but the Napster brand is, at least last I knew, pretty much useless as a brand. If I am wrong, someone please correct me.

      Well, give them a chance, maybe they'll start giving out free music again, just like Napster was when the brand actually meant something more than stocks and dollars changing hands.

      • Well, give them a chance, maybe they'll start giving out free music again

        Sure, that's exactly what I would expect Best Buy to start doing.

    • by Anonymous Coward on Monday September 15, 2008 @11:46AM (#25012319)

      Wow, it just goes to show how out of touch geeks are.

      Ask an average non-geek about napster and they will know automatically that its a music outlet much like itunes. They won't know that it sucks, they won't know much about it at all, but it is a well known brand. So yes if marketed correctly it could be very profitable.

      But it will still suck

      • Re: (Score:2, Informative)

        by larry bagina (561269)
        Maybe it shows how out of touch you are. Roxio bought the napster name in 2002. They spent a lot of money on advertising and marketing. They failed miserably. The only people that make money on music downloads is the RIAA.
      • Well, I don't know which average non-geeks you asked but most non-geeks I know have never heard about napster.
        Napster was a short fad back in 2000 and probably there are still some people out there who remember it - but it's nowhere near as known as iTunes or, say, mp3.com

        50 million dollars can buy *a lot* of marketing. One has to seriously wonder why they didn't simply start a new brand instead of paying so much for a partially tainted (not everybody remembers the good days of napster) and effectively dead

      • Ask an average non-geek about napster and they will know automatically that its a music outlet much like itunes.

        They might remember that Napster involved downloading music from the Internet, but they probably don't know or don't remember that Napster changed to a paid subscription service. You would probably get responses like, "Wasn't that the free music thing, but they got shut down right?". People may know the Napster name, but they certainly don't associate that with paying for music like they do with iTunes. I agree that it could be profitable (in the long run and marginally so), but probably not very profitable

    • by Registered Coward v2 (447531) on Monday September 15, 2008 @12:09PM (#25012703)

      ...how this wasn't a giant waste of cash and a sign that Best Buy is run by PHBs? Honestly, I understand the reasoning (online is where music distribution is, at this point, which cuts into their bottom line), but the Napster brand is, at least last I knew, pretty much useless as a brand. If I am wrong, someone please correct me.

      Napster is a well known brand - and brand awareness is valuable - most folks have no idea whether Napster is good or not - but they know teh name.

      Best Buy essentially hedged its bets on the future of music distribution. WalMart is pushing to reduce the price of music it sells - as well as floor space dedicated to CD's. Wal-Mart's clout is driving the retail CD sales industry and labels are forced to play ball or risk losing significant sales volume; especially since WM really doesn't care if the carry a specific CD since it's contribution to revenue is small unlike the labels where a 10% sales drop can be very expensive. This is forcing the labels to rethink distribution, and Best Buy needs a foot in the door as the market evolves. It isn't just about online purchases but in stor kiosks and cheap memory cards / CD burns to sell a broder catalog at a much lower costs to the store - read higher margins.

      Napster gives them a quick and cheap way to get into the business without screwing up the Best Buy brand (I won't touch taht with a 10 foot pole) since problems will be associated with Napster, not BB. As it grows and the bugs get worked out they can transition to a BB branded service.

      Finally, it also gives them a way to move into the iPhone market *if* they can get a purchase app on the iPhone. Once they get it (Napster) up and running they are no longer trheatened by online purcases reducing CD sales as tehy have a foot in that market as well. In fact, depending on teh margins, they may prefer it.

      • by fracai (796392)

        Finally, it also gives them a way to move into the iPhone market *if* they can get a purchase app on the iPhone.

        Hmmm, unlikely.

        It would probably duplicate functionality [blogspot.com]

        • Finally, it also gives them a way to move into the iPhone market *if* they can get a purchase app on the iPhone.

          Hmmm, unlikely.

          It would probably duplicate functionality [blogspot.com]

          While I realize Apple does that, Best Buy probably has a bit more clout with Apple, and a lot more financial resources to devote to lawsuits, than the average app developer.

          It would far easier, and smarter, to allow BB to do sell music via an app than risk a court deciding that Apple's actions are anti-competitive.

    • by Yvanhoe (564877)
      They are buying the 700 000 subscribers as much as the brand. Plus, the brand 'Napster' is already known to many. That's a huge marketing advantage. To people who know the current sad state of naptser, they'll only have to say "Well, it used to be that way... now we bought it and it got better"
    • and a sign that Best Buy is run by PHBs?

      You needed a sign? Have you been to a Best Buy?

  • This is interesting (Score:5, Interesting)

    by nauseum_dot (1291664) on Monday September 15, 2008 @11:36AM (#25012123)
    I think this could eventually give Best Buy some leverage in selling electronics because they will package downloads with the sale of mp3 players. I think they may be putting together enough clout to give Apple a good scare.
    • by UnknowingFool (672806) on Monday September 15, 2008 @11:50AM (#25012403)
      Seriously do you think Apple is scared of Best Buy? Apple isn't scared of Wal-mart which is larger, has a better IT infrastructure, and can get better deals with the media companies. The main reason Apple isn't scared is that iTunes Store exists only to sell more iPods and AppleTVs. It makes some profit but the company's future isn't bet on it. If iTunes Store were to shut down tomorrow due, it really would not hurt Apple. The problem for Best Buy leveraging downloads to sell mp3 players is that they offer nothing special and are really late to the game. Which DRM would they use? PlaysForSure? We all saw what happened to other MS partners. That would also eliminate their iPod customers as well. No DRM. They have to compete with Amazon and Apple with 700K singles compared to millions for each for Amazon and Apple. Would their integration be as easy to use as Apple or even MS Zune or would it be like every other player out there?
      • by Lumpy (12016)

        Apple isn't scared of Wal-mart which is larger, has a better IT infrastructure, and can get better deals with the media companies.

        I spit coffee all over the monitor on that one.. have you EVER seen the inside of WalMart's IT? Their IT people are bungling and everything is done as cheap as possible. I had a fight with their Senior Networking specialist on how it's impossible to use Cat-5 for telephone use when trying to get a phone line into a subway store. (I so am glad I don't help with Subway IT anymo

        • by ajlitt (19055) on Monday September 15, 2008 @12:22PM (#25012979)

          Why is it impossible? Does POTS not run over 24 gauge twisted pair?

          • by Lumpy (12016)

            yes it does, and CAT-5 is simply telephone wire.

            the moron at Walmart corporate IT thinks that it wont work because and I quote... "Cat 5 is for digital communication. it works for Ethernet, Voip and DSL but not analog voice lines."

            I was stunned at what he said and asked several times if he was serious.

            • by ajlitt (19055)

              Post his snail mail address. I think last weekend's newspaper had a $5 off coupon on Monster Cable EXTREME HD silver satin phone cable.

          • That the GP was on the pro-POTS-over-Cat-5 side, although his comment is at best vague.

        • by KUHurdler (584689)
          so, why can't you use Cat-5 for phone lines? I use it all the time.
        • Re: (Score:3, Interesting)

          by xenocide2 (231786)

          Wal-Mart is known for their massive infrastructure at corporate, logging the sales of their product and warehouse inventory in real time (or very close). At one point my alma mater received a donation of an 82 processor system from them; Pentium Pros, presumably ousted for Xeons by 2000. I don't envy the graduate student employed to make such a beast run to where it's worth having powered on!

          I'm sure there's dumbass field technicians out there that you'd have to interact with as a tenant of Walmart, but I o

          • by Lumpy (12016)

            The Walmart guy claimed he was well informed and would not move from his "you can not use cat5 for analog, the wire is designed for digital communications only."

            • Maybe he thought "the wire is designed for digital communications only" constituted a licensing arrangement, and thats what you would be breaking rather than universal law.
              Of course this would make him twice as stupid, so thats what I will prefer to believe.

        • by jedidiah (1196)

          That may or may not be true, but they are still stomping all over the rest of the retail space with it.

          Those "bungling IT people" are a large part of the reason Walmart
          is putting all of it's other competitors out of business.

          • Re: (Score:3, Interesting)

            by Grishnakh (216268)

            The few times I ever go to Wal-Mart, I don't see any benefit from these IT people, even if they aren't bungling. Instead, all I see is a lot of hassle in shopping there, from spray-paint cans that are locked away (unlike at Lowe's) and require a 30 minute wait to get a manager to open the display case, to a store that looks dingy and nasty, to horrible customers who let their 8 kids run wild all over the store, to parking lots where people who can't drive constantly run into each other.

            I almost never shop

        • Wal-mart has a huge data center and IT infrastructure already. The Internet is littered with many companies that failed simply because their infrastructure couldn't handle their business. Wal-mart already sells music downloads. Between Best Buy and Wal-mart which one could handle a billion downloads in two years? If Wal-mart can't do it today, they'll throw enough money and people to get it done if it was a priority. I don't have that confidence in Best Buy.

          Also which company do you think could ask fo

      • Seriously do you think Apple is scared of Best Buy? Apple isn't scared of Wal-mart which is larger, has a better IT infrastructure, and can get better deals with the media companies.

        Hell, Apple isn't even scared of Apple! (Apple Records that is).

      • I agree. It probably would have been better for them to promote downloading, with oblique references that avoid liability (i.e. Download Your Music from the Internet!*** with lots of disclaimers in small print at the bottom), from file sharing networks. Perhaps even bundling package deals with their floor model PCs, file sharing software, and MP3 players all setup and ready to go. The profit for Best Buy, if there is any, will be in the MP3 gadget sales, just as it is for Apple with iPod sales, and not the
      • by Risen888 (306092)

        You had me til the end.

        Would their integration be as easy to use as Apple or even MS Zune or would it be like every other player out there?

        That's funny, see. When I think "integration" I think "I plug my audio player into the USB drive, it pops up as a folder just like any other folder and I put files in it just like any other files." iPods don't do that.

        • by Dog-Cow (21281)

          That's funny, I think you're an idiot. How is showing up as a generic drive an "integrated music player"? Oh right, it isn't.

          You don't have to like it, but an iPod integrates with Apple's music app and Apple's music/media store. iTunes will notice if there's something new on the iPod and copy it to the comp and vice versa. Automatically, if you want. That's integration.

          Forcing me to find which drive letter was assigned, popping up explorer to browse to my media, figuring out what's new on the comp vers

          • by Risen888 (306092)

            an iPod integrates with Apple's music app and Apple's music/media store. iTunes will notice if there's something new on the iPod and copy it to the comp and vice versa. Automatically, if you want. That's integration.

            To my knowledge, Amarok will do this with any old mp3 player out there (subbing Jamendo/Magnatunes for iTunes store, of course) if that's the kind of thing you're into. Me, not so much. For one thing, I've got half a terabyte of music on my machine. I don't want my music program to try to sync s

        • Whether the iPod pops up as a folder is an OS setting, not an iTunes setting. But that unfortunately doesn't control the music selection as iPods keep the music on a hidden, inaccessible folder. Maybe some users do, but for the average user, they don't care to manually move their music. I might be an example of the typical user. I have like 2,000 songs on my computer. I really don't want to figure out which new folder I have to add to my iPod or which song I need to re-load because I just added the l
    • Re: (Score:3, Insightful)

      by jcr (53032)

      I think they may be putting together enough clout to give Apple a good scare.

      Considering the number of "ipod killers" and "itunes killers" that have come and gone so far, I think that anyone at Apple who felt even a twinge of anxiety over this would be overreacting.

      -jcr

      • Yeah really. Given that both Microsoft and Sony have completely failed to produce an iTunes killer, I find it hard to think that Apple is worried about Best Buy.

        • by jcr (53032)

          Given that both Microsoft and Sony have completely failed to produce an iTunes killer

          Microsoft, Sony, MTV, Wal-mart, Amazon, Real, and I forget who else. The only one that's a viable business is Amazon's music store, and that's because they sell tracks that work on the iPod.

          -jcr

          • My understanding is that Amazon's store is doing fairly well. Better than all those other failures at least. Obviously part of that is that they also sell tracks that work on the iPod.

  • by bigtallmofo (695287) * on Monday September 15, 2008 @11:37AM (#25012133)
    In your face, Steve Jobs!! You and your lame iTunes store are screwed now!

    Expect all kinds of innovation from this combined entity... Like 98.9 cent downloads. Store name that ends in "ster". More.
    • by BitterOldGUy (1330491) on Monday September 15, 2008 @11:42AM (#25012249)
      and the opportunity to purchase an extended warranty on your downloads for 49.95! Protects your investment!
      • Re: (Score:3, Interesting)

        by cowplex (877690)

        Here's the thing - that may be what they do.

        What's the big stink nowadays in digital music distribution? DRM - especially backups. If BestBuy did this right, they could sell a "warranty" for their songs - for $49.99, you can protect say 1000 songs. That way, if they are deleted or lost or whatever, you can simply use that warranty to recover them!

        While the readership here at /. might see through this obvious scam, Joe Sixpack sees it as a good deal. Consumers are already used to warranties on their physical

  • Stupid (Score:4, Interesting)

    by Bill, Shooter of Bul (629286) on Monday September 15, 2008 @11:38AM (#25012155) Journal
    Investors are always saying stupid things like " this could help them compete with Walmart which has its own digital music service". Is walmart's digital music service good? Is is profitable? Does it do anything now, or will it ever, to contribute to the companies bottom line in any way what-so-ever?

    Most of the time, just like this time, its just ridiculous.
    • Re:Stupid (Score:4, Insightful)

      by oahazmatt (868057) on Monday September 15, 2008 @11:45AM (#25012307) Journal

      Is walmart's digital music service good? Is is profitable?

      Wal-Mart has a digital music service?

      In all seriousness, I did not know this. I never see it advertised anywhere.

      • by nawcom (941663)
        Yes; you listen to music via 2 plastic cups that are connected via a really long string.
      • Re:Stupid (Score:5, Informative)

        by Otter (3800) on Monday September 15, 2008 @12:00PM (#25012575) Journal
        I'd never heard of it either, but -- here you go [walmart.com].

        $9.22 albums, DRM-free MP3s, can't purchase on Firefox or on non-Windows. Not bad, if you have Windows and IE. Does browser ID-spoofing work?
        • Re: (Score:2, Interesting)

          Not bad, if you have Windows and IE. Does browser ID-spoofing work?

          No, but this does the trick. [virtualbox.org] ;)

        • Re: (Score:3, Informative)

          by MikeXpop (614167)
          I remember when they launched this and the story broke on Slashdot [slashdot.org]. Back then the draw was $0.88 DRM-free WMAs, which now seem to be MP3s. I can't check the site at all on my mac, so I don't know if the price-per-song has changed. In any case, the Amazon store seems to have made Wal-Mart's service obsolete; Amazon delivers cheaper albums in DRM-free MP3s available on all platforms.
    • by jedidiah (1196)

      Walmart is a lot like Microsoft in this respect. Their online store can
      be crappy for 10 years while they sort themselves out and get it sort of
      right (at least close enough for their typical customer) by version 8
      or somesuch.

      In the meantime, Apple gets to deal with the ascension of the online
      equivalent of Walmart not screwing things up quite so badly (namely
      Amazon).

    • You're right... But the same investors that like this idea are the same ones that liked backing junk mortgages...

  • at Napster a while back and a few other digital stores and I just can't justify paying a $1.00 for a song that, at most stores, I don't really own any way.
    • Re:I looked (Score:4, Informative)

      by DanZ23 (901353) <dzmijewski@g[ ]l.com ['mai' in gap]> on Monday September 15, 2008 @11:53AM (#25012455)

      You should look into Amazon's mp3 downloads. less than a buck a song, and totally DRM free. I get 99% of my music this way

      • by mikesd81 (518581)
        99 cents doesn't count. Majority of the mp3s are $0.99.
      • by vux984 (928602)

        You should look into Amazon's mp3 downloads. less than a buck a song, and totally DRM free. I get 99% of my music this way

        As is 'itunes plus' music. I recognize that a minority of itms music is the drm free 'plus' kind, but still... I think its the direction even apple is moving. They have to.

  • by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Monday September 15, 2008 @11:43AM (#25012257) Homepage Journal

    You know, I tried hard to think of something funny here. There's just not a punch line you can add to this.

    To paraphrase Hank Hill, this acquisition is the feces that is produced when shame eats too much stupidity.

  • Does that mean that the Geek Squad will be replaced by the Napster Squad? Dang, they'll have to repaint all their cars!!

  • A few days ago, there was a article about Best Buy planning to have Windows Gurus to push Vista. WIth the acquisition of Napster, I am not sure what kind of monster will be created.
  • by illectro (697914) on Monday September 15, 2008 @11:55AM (#25012487)
    Napster 2.0 is of course a Napster Branded music store created by Roxio.

    All the engineers from napster went off to setup their own music sites, the most high profile children of Napster are of course Snocap [snocap.com], which was setup by Shawn after napster 1.0 died and later got acquired by imeem.com [imeem.com] which was also started by napster engineers and has become the most popular web2.0 music site (over twice the users of last.fm).

    There's also finetune [finetune.com] and a few other small music projects that can trace some lineage to the original napster. Every single one of these descendants from napster are a whole lot more interesting and innovative than what the Napster brand ever did.

    • by Otter (3800)

      Every single one of these descendants from napster are a whole lot more interesting and innovative than what the Napster brand ever did.

      Presumably you're talking about the later Napster efforts, right? The original Napster may not have been especially ethical, but there's no question that it was revolutionary and industry-shaking.

      • by illectro (697914)
        Yes, the revolutionary and industry shaking part of napster 1.0 clearly never got sold along with the brandname.
  • Great... (Score:2, Funny)

    by fahrbot-bot (874524)
    Can't wait for Best Buy to add the "Extended Warranty" option to my on-line music purchases... :-)
    • Re: (Score:3, Insightful)

      by GIL_Dude (850471)
      You know what? I bet they do. They might not call if "Extended Warranty". They'll probably call it "Download Protection" and sell it with lines like: "What if your hard drive crashes? Do you want to have to buy all that music again?"

      Just like with real extended warranties - mostly hogwash and lies.
  • I'm sure this will work out perfectly for them. I mean, take a look up here at Canada. Best Buy Canada is owned by Future Shop. And Future Shop opened their own digital music download store, too. It's called Bonfire, and...

    Wait, what's that? Oh, okay, it wasn't really their own download store. It was just Puretracks with a custom skin on it. In any case, it blazed their trail into the future of music downloads and...

    Huh? Oh. Okay, it turns out Bonfire [puretracks.com] was a massive flop and was shut down this year.

    Well, in

  • Here's what I don't get: Napster started as a free app to download pirated music. Now after many changes, it's being sold for millions of dollars. What are they exactly bringing to the table? Just the subscribers?

    The sale of myspace for an obscene amount of money makes more sense than this(eyes to see ads). Still not quite getting the Napster sale.

    Then again, this is the same world that the "I'm rich!" iPhone app sold for a while.

    • by jimicus (737525)

      Here's what I don't get: Napster started as a free app to download pirated music. Now after many changes, it's being sold for millions of dollars. What are they exactly bringing to the table? Just the subscribers?

      Seems that way.

      Interesting maths that has the subscribers valued at around $40 million each.

  • Wired is running the same story, but with a $121 Million price tag [wired.com]

    Somebody's a bit off....

    • OK, in my defense, while I didn't read the summary past the first line, I did RTFA (which didn't mention $121M)
    • Wired is running the same story, but with a $121 Million price tag

      Best Buy is paying $121 million. However, Napster has about $67 million cash and short term investments, and since Best Buy buys the whole, complete company, they will aquire these $67 million as well, so their actual cost is only $54 million.

  • my dream (Score:4, Funny)

    by Dan667 (564390) on Monday September 15, 2008 @12:50PM (#25013597)
    Is for Best Buy to hire Larz to pimp Napster. Best Buy goes down the tubes like AOL/Time Warner. Larz goes bankrupt. And Shawn Fanning buys Napster for a dollar.
  • by mr_lizard13 (882373) on Monday September 15, 2008 @03:19PM (#25016137)
    ...downloaded it for free

    Suckers!!!!

That does not compute.

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