The deal of the century?
No, not that one. We'll get to the Bank of America Merrill Lynch deal when the dust has settled.
The one that has us going is Best Buy's acquisition of Napster. Why did the #1 US electronics retailer see a need for buying the (now legalized) file-sharing company. Once plagued with law suits from music companies and rescued from bankruptcy, Napster now arranges for legal downloads and subscriptions to digital music and downloads to AT&T cellphones.
For Best Buy, it's partly a reaction to the steady decline in CD sales. While the big money at BestBuy comes from computers, flatscreen TVs and audio equipment, but sales of CDs, DVDS, games, and software have been an important part of the business. As online delivery becomes important in all those areas, BestBuy needs to hang on to its position, even expand it. Best Buy is finding itself more and more in competition with Wal-Mart on the one hand and Amazon on the other. Both companies are expanding their MP3 delivery services, and Best Buy feels pressure to get on board.
The price wasn't too bad either, at $120 million. BestBuy already uses a Rhapsody, a major Napster competitor, for downloading MP3 files. Presumably they think the Napster subscriber list (claimed to be700,000) and software is a better deal for them.
The problem as we see with this vertical move that it puts Best Buy in competition with Apple iTunes. That's a big deal since Best Buy is the only licensed outside vendor of Apple's iPhone and is a major iPod reseller as well. In this way, two companies that had a clear relationship in the food chain (vendor and dealer) now will have afar more confused relationship.
9:57:55 PM 
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