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Source:Mashable!

Napster, the original peer-to-peer music sharing network that has since transformed itself into a legal subscription service, is being acquired by Best Buy. The electronics retailing giant will be paying $121 million to buy Napster – a more than 85% premium to where Napster’s beleaguered shares were trading as of Friday.

Although Napster was able to sign up more than 700,000 subscribers, the service was never profitable and was on track to run out of cash sometime next year. Under Best Buy’s ownership, that problem is resolved, and the combined companies are confident that they can use Best Buy’s massive reach and distribution to improve the business, in addition to leveraging Napster to sell other digital products to consumers.

In corporate speak, Best Buy says “We can foresee Napster acting as a platform for accelerating our growth in the emerging industry of digital entertainment, beyond music subscriptions. We’re very excited to add these capabilities to leverage our existing relationships with the labels, the studios, and the hardware providers. We believe Napster will be an outstanding addition to our already robust portfolio of partners and offerings in the digital music space.”

While Napster was the first big name in online music (and actually sold its name for $8 million after being shut down by music industry lawsuits in 2002), it has been lapped many times over by Apple’s iTunes, with the pay-per-download model proving far more popular than all-you-can-eat subscriptions.

Napster has recently moved to catch up, launching a web-based version and offering DRM-free downloads. In the end, that wasn’t nearly enough to make Napster a successful standalone business, but Best Buy is certainly one of the more logical places for the company to land.

—Related Articles at Mashable - All That’s New on the Web:Napster Investor Settles Last Lawsuit for $130MNapster to Offer Wireless Downloads on AT&TNapster Launches a New Web-Based Version of Subscription ServiceNapster Loses CFO; Shares Hit a New LowNapster to Offer DRM-Free MP3 DownloadsWill 6 Million DRM-free MP3s Restore Napster’s Former Glory?Napster Raising Prices. Is it Going Out of Business?

This entry was posted on Monday, September 15th, 2008 at 9:35 am and is filed under News, napster, music, itunes, Best Buy, Digital Music. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.