Tired of loosing revenue to iTunes
Last modified on Tuesday, 16 September 2008 08:15
Best Buy has made a move that is certainly going to make people wonder what they were thinking. In an effort to cash in on the music download media shift that is taking place in the industry, Best Buy has moved to purchase Napster.
The Jobs squad is going to be unhappy to see Best Buy go on the attack against iTunes, but the reality is that Best Buy used to make a lot of money selling music and movies, but now a good portion of this revenue is being delivered via digital distribution from iTunes. Best Buy seeks to build a new revenue stream for digital downloads with its ownership of Napster.
In a deal that is valued at about $54 million that should close during the fourth quarter. Best Buy will look to reinvent Napster, along with Best Buy’s own digital download efforts, in order to morph the new Napster into something that can compete with iTunes. Napster’s online music store generated only $127.5 million in revenue last year and Best Buy will be looking to improve on that figure.
While no employee changes are planned at this time, we do suspect that we will see some changes as time goes on. Best Buy does have the ability to steer a lot of business in the direction of the Best Buy-owned Napster, and it just might be the kind of connection necessary to compete with the sheer strength that Apple has shown with iTunes in this market space. Only time will tell.