Roxio's (NASDAQ:ROXI) Napster may have an uphill battle, what with the tough competition in the music-downloading market, but today it announced what may make for a more compelling future. Napster is offering its services through consumer electronics giant Best Buy (NYSE:BBY), which includes a co-branding arrangement for customers to download tunes through BestBuy.com.
Meanwhile, the deal gives Best Buy a $10 million stake in Napster's parent company, another vote of confidence.
It wasn't long ago that I questioned the effectiveness of Napster's MP3 player giveaway. However, it's hard to question the wisdom of this deal with Best Buy, as it should heighten Napster's profile and perhaps get its service into the minds of those who haven't made the iPod the Apple (NASDAQ:AAPL) of their eye.
It's hardly been missed here at the Fool that this is a budding industry where anything might happen as the competition increases and evolves. Consumer giants are getting into downloads, like Wal-Mart (NYSE:WMT) and even McDonald's (NYSE:MCD), which is peddling Big Mac music through its agreement with Sony's (NYSE:SNE) Connect service. Circuit City (NYSE:CC) has its own downloading service, which Best Buy can now answer through the Napster deal.
Judging by feedback from Napster loyalists, people do have a variety of reasons to favor and frequent different music-download venues. And with Napster channeling a high-profile consumer force with a ton of marketing muscle (Motley Fool Stock Advisor pick Best Buy boasts 614 stores, which reach 300 million consumers every year), it may be increasing its chance for greater market share after all.
Today, Roxio shares busted a move, having gained more than 20% in this morning's trading activity. While the deal does give reason for celebration, that kind of exuberance puts the tough competition in the industry on pause.
Do you want to read more recent commentary on music downloading?
- Loudeye Busts a Move, by Seth Jayson
- Coke's European Tune, by Brian Gorman
- Mixed Messages on Music Downloads, by Seth Jayson
Best Buy may be a Motley Fool Stock Advisor pick, but the fact that it hiked its dividend today makes it interesting for those who are interested in stocks that pay in more ways than one. For ideas along those lines, consider taking a look at Motley Fool Income Investor .
Alyce Lomax does not own shares in any of the companies mentioned.
