Blog Post

AOL Sells MusicNow Subscribers To Napster For $15 Million

Updated: NYT is recasting this differently, even though the official release from AOL/Napster did not mention this explicitly: It is a sale of MusicNow to Napster, or at least the customers of former to latter. Napster will pay $15 million to add AOL’s 350,000 subscribers to its own 566,000. The price amounts to about $43 a subscriber, which appears low considering that Napster is valued at $186 million, or $328 a subscriber. Also, Napster will make additional payments to AOL if it reaches certain new subscriber targets.
Original post: A week after Virgin Digital announced closing its online music service, AOL is closing down its own subscription service MusicNow. It will offer Napster to its 350,000 paying subscribers, which is the second windfall for the company after Virgin subscribers (however puny that number was) were also offered the Napster music service.
MusicNow was an independent online music service from 1999-2004, when it was bought by CircuitCity for about $6.5 million, who then flipped it to AOL in 2005, for about $10 million-$15 million, and has half languished since then, as AOL promoted its music portal AOL Music more.
AOL and Napster expect to complete the service migration within the next 60 days. AOL also will promote Napster with links to its service throughout AOL Music site. Full details in the release here.