As part of its expansion strategy to grow via direct acquisition of members and distribution deals, Rhapsody has signed a deal to acquire Napster from Best Buy. Under the terms of the agreement, Rhapsody gets Napster’s subscribers along with “certain other assets,” which include a “robust IP portfolio.” In exchange, Best Buy gets a minority stake in Rhapsody. The transaction is expected to close on or around November 30, 2011.
So what do we get from this? For one thing, we do understand Rhapsody’s strategy to keep expanding its reach in the industry which is steadily getting interest from such big players as Apple, Nokia, Google, Amazon and Microsoft. According to the company’s president Jon Irwin, this is a “go big or go home” business, and my question is whether Rhapsody can get big enough to compete in the long term. Or it may end-up being acquired by a bigger player? What do you think?