Best Buy expects to boost stores sales with online Napster deal

Best Buy Co. Inc. has agreed to promote Napster as its primary partner for digital music, a move that Best Buy hopes will spark in-store sales of MP3 players and other items. “That’s why we’re really excited about this agreement,” Scott Young, Best Buy’s vice president of digital entertainment, tells InternetRetailer.com. “We’re very pleased with the success of digital music sales so far, but we want to capture a greater market share.”

Best Buy will also receive $10 million in stock over the course of the multi-year agreement from Napster parent Roxio Inc., the companies said today. The stock compensation to Best Buy, which will be in addition to Naptser’s contribution to co-funded marketing efforts, "gave us more incentive to enter the deal and gives us a stake in helping to grow Napster’s subscriptions," a Best Buy spokesman says.

Although Best Buy will continue to offer its customers competing digital music products and services, it will more heavily promote Napster through a co-branded music download service accessed through BestBuy.com, through in-store kiosks that offer demonstrations of music downloads, and through store signs and special displays of Napster MP3 music players and accessories, Young says. He adds that Napster’s technology is compatible with about 70 different MP3 players, which added to its value as a marketing partner.

"Best Buy, with its proven success of driving millions of digital subscriptions, has a unique understanding of how to successfully market the Napster subscription experience," says Chris Gorog, chairman and CEO of Napster and Roxio.

Best Buy will also continue to market Napster’s prepaid cards that consumers use to purchase music downloads online, but the two companies will begin to offer additional varieties of cards to offer more value choices, Young says. The common prepaid card, which offers 15 song downloads for $14.95, will be joined by cards offer larger values, he adds.

“We’ve seen incredible success with prepaid cards,” a Napster spokeswoman says.

Consumers pay Napster $9.95 per month to download an unlimited number of songs to their computer hard drives, plus 99 cents per song to download songs to a CD or an MP3 player.