Rhapsody Acquires Napster From Best Buy

Music streaming giants join forces in mega deal.

Posted: 10/04/2011 05:02 PM EDT

In a bid to maintain relevance and sustainability in an age dominated by newcomers like Spotify and Rdio, veteran streaming services Rhapsody and Napster have announced a deal to merge their businesses.

Rhapsody will acquire the subscribers and music rights owned by Napster, which was purchased by Best Buy three years ago for $121 million. While Napster's subscriber numbers have not been made public, Rhapsody has previously stated that it has over 800,000 paid subscribers on its own.

“There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals,” said Rhapsody's president John Irwin in a statement. The deal, for an undisclosed sum, is expected to be completed by the end of November.

Rhapsody, which offers access to a library of over 13 million songs for $10 per month, was launched 10 years ago as a spinoff of Real Networks. Before its acquisition by Best Buy turned it into a similar streaming service, Napster had been a file-sharing site that became synonymous with the music piracy boom at the turn of the millennium.

Both companies have seen increasing competition from newer, cheaper services including Spotify and Rdio, both of which were integrated into Facebook late last month. Spotify, which launched in Sweden in 2008 before coming to America this summer, has claimed to have over two million paid subscribers.

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