Monday, September 15, 2008

Deja Vu - Physical Retailer (Best Buy) buys Digital Music Provider (Napster)

Best Buy Co., Inc.Image via Wikipedia What's old is new again, eh? News just broke that Best Buy purchased Napster for $121 Million. Congrats to Napster for finding an exit, but I'm not all that bullish on the prospects for Best Buy to be successful with this. This has been tried numerous times in the past by physical retailers, without one highlight coming to mind. The one I am most familiar with was Circuit City's purchase of MusicNow several years ago, only to see Circuit City (re)sell it to AOL (for cheap) after being unable to capitalize on it.

I've spent all of 10 minutes thinking about the implications of this, but I'll start with these knee-jerk reactions:

  • Yet another subscription model disappears... do you want a subscription relationship with a retailer? I don't. I'm not sure why I find this so unappealing when I have subscription relationships with many (less trusted) companies than big box retailers, but it just doesn't *seem* right to me.
  • Would Best Buy consider selling off the subscribers to Rhapsody and just focus on selling DRM-free MP3s? Perhaps... that's an easier sell to their current customers. Buy and iPod at Best Buy and get 10 free MP3s? That could actually be a pretty interesting conversion strategy.
  • Most consumers have relationships with a digital goods provider right now (e.g. Apple) and I don't see an incentive for them to switch. Granted, Amazon has been successful in selling both physical and digital goods, but I think they are the exception not the rule. Although, I'm thinking that Best Buy sees the digital platform giving them the ability to more proactively push digital commerce affiliate relationships with "click to buy" MP3 links that are meant to compete with Amazon's and iTunes.
I'm sure my thoughts will continue to evolve on this over the next day or so, but what is for certain is that the digital music space continues to have more rehashed storylines and drama than your average daytime soap opera...

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