The acquisition will give Rhapsody Napster's paying subscribers as well as "certain other assets" including Napster's IP portfolio. The companies' announcement did not divulge the current number of Napster subscribers, but it's understood to be at least half of Rhapsody's 700,000 subscribers.
Napster is best known as the controversial peer-to-peer filesharing service that shook up the music industry a decade ago by making a massive, distributed library of music and other files available to download for free. After a few years of legal battles with the Recording Industry Association of America (RIAA), Napster shut down its original P2P filesharing service in July 2001.
Napster filed for bankruptcy and was ordered to liquidate its assets in 2002. The company's assets and brand changed hands a few times before being purchased by Roxio, which relaunched Napster as a pay subscription music service.
After its relaunch as a pay service, Napster never quite regained the popularity it once had in its P2P days, during which it grew significantly thanks to the ongoing media coverage and controversy Napster garnered at the time.
This latest deal effectively rolls Napster's remaining subscribers and IP portfolio into Rhapsody, which the company hopes will better position it to compete against the likes of Rdio, MOG and Spotify, the European on-demand streaming service that launched in the United States in July.
This new breed of on-demand, all-you-can-stream subscription music service has been growing in popularity in the years since the demise of the original Napster. Several of them, including Spotify and Rhapsody, recently unveiled tight integrations with Facebook for a more social music-listening and sharing experience. There's even evidence suggesting that the rise of pay subscription services has helped decrease illegal piracy of the sort Napster originally enabled.