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Article

Title: Napster Deal Points to Apple's Dominance

Author: Smith, Ethan; Zimmerman, Ann
Source: Wall Street Journal, v252 n65 pB7(1) Publication Date: Sep 16, 2008
  ISSN: 0193-2241
URL of Publication: http://www.wsj.com

The Napster-Best Buy merger, at the cost of $121 million, brings a new realm of competition to the field of digital music dominated by Apple Inc. Best Buy values the deal as each of Napster's subscriber base works out to $171. Earlier Best Buys Dave Morrish had paid far more, as much as $5,000, for each subscriber. With 708,000 consumers in June 2008, Napster had offered consumers access to an unlimited music library for a monthly fee. This was also tried by Rhapsody of RealNetworks Inc. and Yahoo! Music Unlimited of Yahoo! Inc. However, this strategy fell short of success, especially since it was not compatible with Apple's iPod, which accounts for almost 75 percent of the market for MP3 players. Napster's offers of free online music service and iPod-downloadable music were also unsuccessful in increasing subscriptions. The latest trend in the music industry is to capitalize on corporate sponsors rather than individual consumers, as evident in News Corp.s MySpace deal with State Farm Insurance Cos., McDonald's Corp. and Toyota Motor Corp. With the competition getting tougher, Best Buy hopes to turn around the industry by revolutionizing the Napster digital music space with add-ons like movie downloads, social network sites, and publishing services, at a competitive rate. Through the Best Buy deal, Napster hopes to cater to a worldwide audience with the ultimate aim being to provide consumers access to an unlimited library of music.

Companies:
Apple Computer Inc Apple Inc
Best Buy Co Inc MySpace Inc
Napster Inc News Corp
RealNetworks Inc Toyota Motor Corp
Yahoo! Inc

Products:
iPod RealOne Rhapsody
Yahoo! Music

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