Best Buy Acquires Napster to Bolster Web Retail

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Best Buy said today it would spend $121 million to buy former file-sharing poster child, Napster. The move gives Best Buy the ability to offer DRM-free movies and music downloads that would compete with Amazon.com’s download services as well as proprietary files offered by Apple in its iTunes store.

Coming on the heels of Best Buy’s newly launched GifTag online shopping registry and its efforts to beef up its cell phone department, I’m thinking the bricks and mortar store might be serious about becoming a knowledgeable hybrid retailer with an equally robust Web presence. This would be a huge step for a company that was in trouble with the Connecticut attorney general for using a different version of its Web site in stores to cheat customers out of the lower online prices, so it depends on Best Buy being willing to execute.

This time around, Best Buy is taking some worthy steps, such as signing up to sell the iPhone and using open standards to develop its online gift registry service. A consumer can essentially sign up to the GifTag service, and then grab any content from around the web to create a wish list. So far it’s only a one-way registry, as items are not marked off the list automatically after purchased. Best Buy says in a few weeks it should have the APIs ready to enable that function.

If Best Buy can create a series of compelling web services (I love in-store pickup) that combine its 1,300 retail locations with web services and digital content delivery, it has a chance to offer a hybrid retailing strategy that keeps its bricks-and-mortar shoppers happy, while attracting those who have defected to Amazon.com. I will admit that when shopping for electronics I’d much rather buy at a place where I can return an item easily than at Amazon.

10 Comments

A.B. Dada

Money, meet toilet.

What a waste of money for Best Buy investors. Digital content control is not the future of profitability: not for Napster, not for iTunes, not for any of the myriad of companies that believe that distributing content is a profitable venture for the midterm future.

As the youth grow up realizing that digital content is near unlimited in supply (thanks to P2P), the price will continue to fall. DRM and other protective means will not hamper distribution of content that costs very little to distribute.

This is a bad thing for the monopolistic industries that have controlled not just recorded content but promotional content (such as live music promoters, etc): they’re fearing going the way of the do-do, and it seems like they are.

Bands that couldn’t earn a buck selling albums in the past in the payola days (up until recently) are now finding a decent income touring: selling their labors to customers, just like you and I do with our jobs.

I can’t imagine why the big companies think content sales are key. We’ve progressed beyond the need for radio, TV, and the other controlled content distribution industries. There’s money to be made selling art and productions, but it is made more by offering one’s services uniquely (face-to-face possibly), not by hoping to be a top album seller.

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