Our take...
Screen Digest believes that Best Buy's acquisition is unlikely to propel the retailer into a significant position on the digital music market. As previously discussed, paid online subscription model is not viable for content other than sports. Although Napster's core subscription business is well-established, the company has not turned a net annual profit (though it managed to minimise net losses from $36.8m in financial year 2007 to $16.5m in the financial year ended 31 March 2008). Moreover, both Napster and Rhapsody, two leading rental music subscription services, have seen their subscriber numbers dwindle over the past year despite international expansion. In the last quarter Napster experienced an 8.1 per cent year-on-year decline in subscriber base, in spite of the acquisition of 225,000 AOL's Music Now subscribers in early 2008.

The combined Best Buy – Napster a-la-carte MP3 download proposition is also unlikely to see significant uptake. It lacks the iPod-iTunes ecosystem advantage that gives Apple the dominant position in the hardware driven music market. It is also unlikely to replicate the success of Amazon MP3 store, whose uptake is mainly attributable to converting of Amazon's existing user-base, accustomed to purchasing physical music on the website, to buying digital music. The Napster brand, which has considerably contributed to the initial uptake of the subscription service, has diminished in importance since Napster went legal and thus will do little to encourage service uptake.