Mike McGuireNapster, a name that once used to strike fear in the hearts of music industry executives but of late seemed to bring up the rear of the online music market in terms of users and revenues, will be purchased by BestBuy for $121million.
Napster 2.0, as company backers named it when the service launched in 2003, came to market after Chris Gorog, head of software company Roxio, purchased the assets of the original company which developed the infamous file-trading software, and the pioneer online music service pressplay, itself a joint venture between Universal Music and SonyBMG. Napster pursued the subscription model and only added the download-to-own a la carte model as something a bit more than an afterthought, but not much more. Like RealNetworks’ Rhapsody, Napster’s subscription model was hamstrung in the marketplace by less-than-effective and compelling marketing messages about the value of subscription services; complications to that arose from the requirement for rather restrictive DRM technologies used to enforce the usage rules required by the labels.
What seems clear from the press releases and comments is that BestBuy has no intention of setting expectations very high e.g. can BestBuy challenge Amazon or iTunes? Probably not, but that’s why I’d expect the BestBuy-Napster combo to be looking beyond the early adopters.
Instead of trying to woo users of iTunes or Amazon’s MP3 service, BestBuy is going to target everybody else – and that’s everybody who primarily buys their music (and other media) in physical CDs or DVDs. And that makes a lot of sense, actually. BestBuy could make significant inroads is leveraging their breadth of products and services to get the late-adopter majority – those folks who still buy the majority of their music in the form of CDs and rent or buy DVDs – to move to online media acquisition. If you look at the BestBuy acquisition of Napster as the purchase of a service that can help its other service business, the Geek Squad, the business in bringing late-adopters/stragglers into the online music/media market starts to look pretty good. Especially when you consider the fact that BestBuy also sells Sonos’ multiroom digital music systems. (Sonos does have an option that does not require a PC but instead allows for a broadband connection to connect directly to its system of controllers allowing the consumer to access a subscription service such as Napster, or Rhapsody could be particularly compelling for BestBuy.)
But really, can BestBuy challenge Amazon or iTunes? Probably not, but that’s why I’d expect the BestBuy-Napster combo to be looking beyond the early adopters.
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Category: Online Music Tags: BestBuy Napser
