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Rhapsody to Purchase Napster

Subscription music model is questioned by some

On-demand music service Rhapsody announced an agreement to acquire Napster’s subscriber base along with other assets.

A minority stake will be given to Best Buy Co. Inc., owner of Rhapsody.

The deal is in line with Rhapsody’s growth strategy to expand through the direct acquisition of members and distribution deals.

In a press release, Rhapsody President Jon Irwin heralded the value of Napster’s subscribers and “robust IP portfolio.”

“This is a ‘go big or go home’ business, so our focus is on sustainably growing the company,” he said. The deal is expected to close by the end of November.

Jon Healey, a business columnist in the L.A. Times, said the current version of Napster “simply isn’t competitive” in the current environment, noting estimates that subscriptions had fallen off sharply while competitor Spotify has grown.

He urged Rhapsody to keep Napster’s policy of letting subscribers listen to an unlimited number of songs online for free in exchange for buying a certain amount of MP3s per month. (He added: “Every music executive I’ve talked to says that neither Spotify nor any other music service seems to know how to generate enough money from advertisers to make a free tier work.”)