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Best Buy Coughs Up $54 Million For Napster

Posted by ScuttleMonkey on 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."

39 of 164 comments (clear)

  1. ... and somehow, they managed to make it suck more by Anonymous Coward · · Score: 5, Funny

    Good work, Best Buy. That takes effort.

  2. Just a name... by religious+freak · · Score: 3, Interesting

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

    --
    If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
    1. Re:Just a name... by jep77 · · Score: 5, Funny

      Well it was either that or buy naming rights for a stadium. They may have made the wrong choice.

    2. Re:Just a name... by larry+bagina · · Score: 2, Informative

      Roxio didn't do a particularly good job of making money with the napster name.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    3. Re:Just a name... by penguinstorm · · Score: 2, Funny

      Since when was Napster a household name? It's so far off the cultural radare you couldn't hit it with a Phoenix missile.

      Those crazy kids today haven't ever even used Napster. It's like talking to them about the Love Boat: they just get a blank look in their eyes, and nod accommodatingly.

      As for my general thoughts on this, I'll try to be brief.

      WTF?

      --
      Skot Nelson music is my saviour / i was maimed by rock and roll
    4. Re:Just a name... by Ethanol-fueled · · Score: 3, Insightful

      Nobody did a good job of making money with the Napster name after Napster wasn't free anymore ;)

      It hard to see how Best Buy will make Napster worse because Napster started to suck the second they became a pay service -- Unlike the Geek Squad, which I heard were respectable until they became Best Buy's monkeys. Note: You'd be surprised what the "Geek" Squad can't fix!

      I know because I worked for a contractor that took care of Best Buy's warranty laptop repair and we were doing things like malware removal and OS/driver reinstalls.

  3. Hey, blue-shirt bitches! by Anonymous Coward · · Score: 3, Funny

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

  4. Can anyone explain... by Darundal · · Score: 4, Insightful

    ...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.

    1. Re:Can anyone explain... by garcia · · Score: 4, Interesting

      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.

    2. Re:Can anyone explain... by Anonymous Coward · · Score: 5, Insightful

      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

    3. Re:Can anyone explain... by Registered+Coward+v2 · · Score: 3, Interesting

      ...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.

      --
      I'm a consultant - I convert gibberish into cash-flow.
    4. Re:Can anyone explain... by larry+bagina · · Score: 2, Informative

      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.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

  5. This is interesting by nauseum_dot · · Score: 5, Interesting

    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.

    --
    Crap! I just kissed my karma good-bye.
    1. Re:This is interesting by UnknowingFool · · Score: 5, Insightful

      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?

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    2. Re:This is interesting by jcr · · Score: 2, Insightful

      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

      --
      The only title of honor that a tyrant can grant is "Enemy of the State."
    3. Re:This is interesting by ajlitt · · Score: 3, Insightful

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

    4. Re:This is interesting by samkass · · Score: 3, Informative

      When they, by using that ipod they sold you, tie you into becoming a subscriber (eventually) spending all your bucks for music, movies, tv shows and all your other media needs on *their* itunes infrastructure, making 30% on all your media, then that's way more worth for them than an ipod sale.

      Are you saying that Apple is lying in their SEC filings? Because from everything they've reported to their shareholders, what you say is the opposite of true. Maybe someday the iTunes store will turn into a cash cow, but right now it's smaller and more or less break-even. As of the latest quarterly report, Apple was making at least twice as much revenue and better margins from hardware sales as store sales.

      The big advantage Apple gets when you buy things from the iTunes store is that most of it only works with other iPods, so the next hardware purchase will likely also be an iPod (75%) instead of a SanDisk (15%) or one of the other bit players like Microsoft (2%).

      --
      E pluribus unum
    5. Re:This is interesting by xenocide2 · · Score: 2, Interesting

      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 only hear praise for their internal IT machine. Which side of the Cat-5 debate were you on?

      --
      I Browse at +4 Flamebait

      Open Source Sysadmin

    6. Re:This is interesting by Grishnakh · · Score: 2, Interesting

      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 at Wal-Mart any more because it's such a miserable shopping experience. If I want cheap stuff, I go to Target instead. Maybe it has something to do with my particular area, but around here the Wal-Marts are all like a zoo, and seem like a good place to get attacked by gang members, whereas my local Target is clean, and the customer base seems much less dangerous than the one at Wal-Mart.

    7. Re:This is interesting by UnknowingFool · · Score: 2, Interesting

      The main reason Apple is the biggest player is they figured out that the average customer would like the process to be as easy as possible.

      How do you sync your iPod with your computer? 1) Plug in your iPod. There is no #2 if you accept iTunes defaults. I was one of those who bought earlier and got a Diamond Rio. Syncing up that thing to my computer took 4 or 5 steps some of them complicated.

      How do you get your music on your computer? 1) Put in your CD or 1) Click on iTunes Store and browse, 2) Click on purchase. 3) Enter in your method of payment info. 4) Wait for the dowload. With other services there were like 2 or more extra steps.

      If I'm the typical iPod/iTunes customer, I have like over 2,000 songs on my iPod. Maybe 10 of them are iTunes. The rest were from CDs. Of those 10, they were impulse buys or singles only or laziness in not going to the store to buy the CD or a combination of the three. So iTunes has made $10 dollars off me. If I were to switch to Zune or Creative, I would not weep for that $10 loss and nothing really stops me except I like my iPod.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
  6. Did you hear that, Steve Jobs? by bigtallmofo · · Score: 4, Funny

    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.

    --
    I'm a big tall mofo.
    1. Re:Did you hear that, Steve Jobs? by BitterOldGUy · · Score: 4, Funny

      and the opportunity to purchase an extended warranty on your downloads for 49.95! Protects your investment!

    2. Re:Did you hear that, Steve Jobs? by cowplex · · Score: 3, Interesting

      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 goods, and with a little bit of clever marketing I can see consumers getting taken advantage of with a "warranty" ploy.

      But here's the rub: we have been raging against lock-in and recoverability for quite some time now - enough to alert the less technical consumer. BestBuy comes out with a warranty on music, and markets it right, the consumer sees the problem as fixed and buys stuff from BestBuy.

      I know you were joking, but really a music warranty could be a viable business model. Let's hope it doesn't happen...

  7. Stupid by Bill,+Shooter+of+Bul · · Score: 3, Interesting

    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.

    --
    Well.. maybe. Or Maybe not. But Definitely not sort of.
    1. Re:Stupid by oahazmatt · · Score: 3, Insightful

      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.

      --
      Those who believe the Internet is private,
      find their privates are on the Internet.
    2. Re:Stupid by Otter · · Score: 4, Informative

      I'd never heard of it either, but -- here you go.

      $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?

      --
      What I'm listening to now on Pandora...
    3. Re:Stupid by morgan_greywolf · · Score: 2, Interesting

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

      No, but this does the trick. ;)

      --
      My blog
    4. Re:Stupid by oahazmatt · · Score: 2, Interesting

      Actually I haven't shopped at Wal-Mart in a long time. A primary factor in that decision goes back to when I had bought a CD from their music section and afterward realized they had "sanitized" the lyrics without giving any notice to the purchaser, as if they were doing me a favor.

      --
      Those who believe the Internet is private,
      find their privates are on the Internet.
    5. Re:Stupid by MikeXpop · · Score: 2, Informative

      I remember when they launched this and the story broke on Slashdot. 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.

      --
      Etiquette is etiquette. He kills his mother but he can't wear grey trousers.
  8. Nothing left to say by Just+Some+Guy · · Score: 4, Funny

    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.

    --
    Dewey, what part of this looks like authorities should be involved?
  9. Windows Guru + Napster = ? by dunnius · · Score: 2, Funny

    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.

    1. Re:Windows Guru + Napster = ? by UnknowingFool · · Score: 2, Insightful

      Easy.
      Windows Guru + Napster = Windows Grapster. Rhymes with how we really feel about it.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
  10. Re:I looked by DanZ23 · · Score: 4, Informative

    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

  11. Not The Real Napster of Course by illectro · · Score: 5, Informative
    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, which was setup by Shawn after napster 1.0 died and later got acquired by 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 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.

  12. Re:Great... by GIL_Dude · · Score: 2, Insightful

    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.

  13. my dream by Dan667 · · Score: 3, Funny

    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.

  14. So cool by Nerdposeur · · Score: 2, Funny

    LOL - totally right.

    "Hey kids - remember when you used to download N'Sync off Napster? Back in 2001? When that first iPod came out with the black text screen, and Napster was synonymous with 'free' and 'rebellious?'

    Good news! Napster is still cool! It's, like, 'phat' and stuff! And now we own it! So it's not free or rebellious anymore. But come on back and give us some money!"

  15. They could have just... by mr_lizard13 · · Score: 3, Funny

    ...downloaded it for free

    Suckers!!!!

    --
    "We live in a global world" - Harvey Pitt, former Securities and Exchange Commission Chairman
  16. Re:... and somehow, they managed to make it suck m by macdaddy357 · · Score: 2, Funny

    Worst Buy and Crapster: Now that's a marriage made in hell!

    --
    How ya like dat?