Napster is online file-sharing site created by Shawn Fanning while he was attending Northeastern University in Boston.
Best Buy Co., Inc. is a Fortune 100 company and the largest specialty retailer of consumer electronics in the United States and Canada, accounting for 21% of the market. [Latest News: Best Buy Launches Remix API]
Given the traffic record of Best Buy it seems that it needs to power up its online marketing strategy by buying Napster. And in September 15, 2008, a report from AppleInsider stated that "Best Buy agreed to purchase Napster Inc. for $121 million as part of a bid to accelerate growth in the emerging industry of digital entertainment and leverage its relationships with content studios". The acquisition includes Napster’s approximately 700,000 digital entertainment subscribers, its Web-based customer service platform, and innovative mobile capabilities. Best Buy also said that it will not relocate the headquarters of the 140 Napster employees.
According to Forbes.com about their report over their research over the papers in SEC, they found out that Napster will owe a $3 million break-up fee, if they wanted to break-off the deal. And chief executive Chris Gorog, President Brad Duea and chief operation office Chris Allen have signed on with Best Buy through March 3, 2012. Their base salaries are $400,000, $315,000 and $315,000 respectively, though they’ll each receive various performance-based bonuses. Gorog will also get a $1.75 million grant in restricted Best Buy shares.
Feedback: About the acquisition, i think they spent too much in buying the company and made it during the time when the economy of the United States is crumbling which is a bad idea. It is like throwing your money on the trash bin. And Napster had already failed many times where issues in the past like the downloading of MP3 in Napster is said to be illegal and recently reported a quarterly income loss. The best part of this is that they are trying to challenge themselves in this exciting market which is good for the company if they surpass the tension running all over the place. We should also be expecting that Best Buy will utilize Napster as a means of bundling Digital Content with its PC and mobile handset offerings.
Clarification: The Napster that Best Buy wanted to acquire is not the old defunct Napster file-sharing network but it is Roxio (..Roxio only bought the name from Napster..). Napster was once-free file-sharing network incorporated in 2000 which was once a favorite tool among cheap college students earlier in the decade.
