Napster Archive

Best Buy has announced plans to acquire Napster today for $121 million in cash. From the release, the proposed acquisition includes Napster’s approximately 700,000 digital entertainment subscribers, its Web-based customer service platform, and innovative mobile capabilities. In conjunction with the definitive merger agreement, Napster CEO Chris Gorog and key members of senior management of Napster have entered into employment agreements, effective at closing, pursuant to which they have agreed to continue as the Napster leadership post-acquisition.

Napster, which recently launched one of the world’s largest MP3 stores, had fiscal 2008 revenue of $127.5 million, an increase of 15 percent over the prior fiscal year; a loss of $16.5 million, an improvement compared with a loss of $36.8 million the prior fiscal year; and positive cash flow for the fiscal year ended March 31, 2008.

Please be aware that we just received word from a Napster user that the Napster service will have a rate increase at the end of this month. The price will be going up 30% from $9.95 to $12.95 but if you act now you can lock-in an exciting annual rate at the $9.95 price! The official memo is below.

I struggle with the reasoning behind why anyone would use Napster in its current form. You don’t own the music, you are just renting it for listening purposes. it can’t be used on the most popular music device today and it’s expensive. With all of the DRM talk lately, it just doesn’t make financial sense to me. Can someone help me understand what the draw is for becoming a Napster subscriber? One theory I’ve heard is that people can easily crack the WMA DRM making it easy to get all the songs you want.

Update: Adam (Ostrow) from Mashable has also posted about the rate increase. He notes, "As someone that sits in front of a computer for the better part of the day, an unlimited streaming plan makes sense for me, since I can listen to as much music as I want."

Uhm, I don’t get it Adam – why not just load up the radio function on iTunes and get all the songs you want all day?

Official memo:

Dear Member,

We wanted to let you know about an important pricing change to your Napster membership.

For the first time in over four years, we are increasing the Napster monthly subscription fee from $9.95 to $12.95. This change will take place beginning on January 30, 2008. As a valued member, we would like to extend a special offer to keep your existing monthly rate.

If you switch to an annual subscription now, you can lock in your existing rate of $9.95 per month. With this special offer, you will be billed $119.40 – a $36 savings over the new monthly rate – for a full year of Napster.