Rhapsody plans on acquiring competitor Napster and merging the two companies. Napster has applications for desktops, mobiles and televisions that Rhapsody wants to incorporate for its users.
The deal was announced Monday and although specific details have not been disclosed, the deal does include Best Buy (the parent company of Napster) taking an equity stake in the Rhapsody-Napster merger. The transaction is expected to close by the end of November.
Right now, Rhapsody has the largest amount of paid users in the United States. This merger will add Napster’s several thousand members to Rhapsody’s 800,000 subscribers.Napster subscribers utilize around 15 million tracks while Rhapsody only holds about 13 million in its library. Because of different label agreements, this discrepancy means that at first some Napster users will be missing somewhere around 2 million potential song titles.
But Rhapsody officials aren’t worried. “We'll be closing that gap once we identify those songs," Jon Irwin, president of Rhapsody, said. All of the most popular user songs are already there, he added.
Rhapsody will now have the challenge of making sure the Napster subscribers transition effortlessly into the Rhapsody services.
Even with the merger, Rhapsody has a lot of competition like iTunes, Spotify, Pandora and Clear Channel Radio’s digital initiatives.
Sources - The truth about the Rhapsody-Napster tie-up, Fortune.CNN