You've Got Napster

Say goodbye to AOL Music Now. The fledgling digital music service will cease to be as the company hands over its roughly 350,000 subscriber base to rival Napster (Nasdaq: NAPS).

The move isn't much of a surprise. Time Warner's (NYSE: TWX) online arm had acquired Music Now from Circuit City (NYSE: CC) and launched the rebranded service this past summer. AOL had a clever gimmick in including its arsenal of music videos with the $9.95 monthly service for unlimited music streaming through your PC (or $5 more a month to make the music portable for media playing devices), but it wasn't going to topple the big dogs.

As of the September quarter, RealNetworks (Nasdaq: RNWK) claimed 1,650,000 subscribers to its Rhapsody music service while Napster was a distant second with 518,000 paying accounts.

The move is a win-win for Napster and Time Warner. Naturally, it beefs up Napster's subscriber count. Time Warner will also be on the receiving end of incremental revenue without the overhead as it migrates users to the Napster platform (and redirects future listeners there as well).

The time is right for Napster to take on the extra weight. Apple (Nasdaq: AAPL) has been reluctant to offer music subscription services to its popular a la carte iTunes model. Microsoft's (Nasdaq: MSFT) Zune Marketplace offers a Zune Pass subscription service, but the player itself hasn't been a blockbuster. However, you can't dismiss sleeping giants like Apple and Microsoft -- or the existing Yahoo! (Nasdaq: YHOO) music service -- from becoming more ominous threats in the future.

Does this deal mean that Napster is no longer interested in listening to buyout offers? No. Napster may be gobbling up AOL's subscribers, but it wouldn't surprise me if a bigger fish -- perhaps one of the three slumbering titans that I just mentioned -- comes along and makes a big splash by swallowing down a well-fed Napster. If you're going to take a nap, you as may well take a Napster.

As AOL will tell you, it's no longer about the Now. It's all about the Later.

Yahoo! and Time Warner have been recommended by David Gardner for his Stock Advisor subscribers. Microsoft is a selection in the Inside Value newsletter service.

Longtime Fool contributor Rick Munarriz is a huge music fan, but with subscriptions to both satellite radio services, he hasn't made the move to tack on a digital music subscription service as well. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.