Best Buy's Cents and Sansa Abilities

Over the years, Best Buy (NYSE: BBY  ) has been setting shoppers up with iPods and portable MP3 players. Now it's getting ready to profit from digital-download transactions that take place outside its gargantuan blue-and-yellow stores.

This afternoon, the consumer electronics retailer announced that it's teaming up with RealNetworks (Nasdaq: RNWK  ) and SanDisk (Nasdaq: SNDK  ) to launch the Best Buy Digital Music Store.

Best Buy has been selling portable media players online for years. The new digital platform now finds it pushing the new SanDisk Sansa e200R, which works seamlessly with RealNetworks' Rhapsody subscription service.

RealNetworks has created a spitting image of its Rhapsody 4.0 service, offering members unlimited streaming for $14.99 a month and individual track downloads at $0.99 a pop, all under the Best Buy brand.

The press release didn't get into how much Best Buy stands to gain in recurring revenue if its consumers stick with the service. With its broad reach, SanDisk and RealNetworks couldn't ask for a better partner as they both gun after the top dogs in their respective fields: Apple's (Nasdaq: AAPL  ) iTunes and iPod.

Yet Best Buy seems like an unlikely company to be targeting Apple, since it has probably sold many of the 60 million iPods that Apple has moved over the years. However, it's also healthy to see a retailer diversify its supplier mix.

The key to making this work will be an aggressive in-store marketing push over the holidays. Even if it's not the ideal setting in which to tout the merits of Rhapsody, pitching the Sansa players will do just fine, as they come with a complimentary two-month subscription to the Best Buy Digital Music Store.

So hold on to those race tickets, folks. You might have thought this holiday season would be all about the iPods and the Zunes, but I predict it'll be a three-horse race.

Best Buy is aMotley Fool Stock Advisorrecommendation. Want to learn why? Check out the subscription based research service with a free 30-day trial membership.

Longtime Fool contributor Rick Munarriz can watch time fly at a consumer electronics store. He's a gadget geek that way. He does not own shares in any of the companies mentioned in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.


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