updated 02:15 pm EST, Tue January 31, 2006
Google, Napster deal?
Google is reportedly considering a major deal with, or possibly an outright takeover of Napster to help get its foot in the digital music door; however, the company later denied any takeover rumors. The New York Post this morning reported that Google has been pushing to align with Napster rather than build its own online music store, a sign that The Post says Google sees subscription services--rather than the individual download model on which Apple's iTunes is built--as the future of digital music. Rumors have been circulating for some time that Google is considering expanding into the digital music industry, and the company recently entered the online video market with its own video store--competing with Apple's iTunes for on-demand content. "We have nothing to announce at this time," a spokesperson for Google said yesterday. A Napster spokeswoman declined comment, citing a quiet period ahead of its earnings announcement, which will come next week, according to the report. [updated]
Napster shares soared as much as 60 percent following the initial announcement of a possible Google deal, and Google has denied the claims.
"We have no plans to acquire Napster, nor do we have plans to develop a music store at this time," Google spokeswoman Sonya Boralv said.
Kit Spring, analyst at Stifel Nicolaus said he had previously suggested that Napster consider selling itself, as its subscriber growth fell after Yahoo cut pricing for its own music subscription service, and as speculation mounts of a subscription option at Apple's iTunes Music Store, according to the Associated Press.
"Alternatively, we believe a partnership with Google would be a positive, but wouldn't likely generate meaningful subscriber growth given Yahoo's lower pricing, Apple's dominance of the digital music market, and Google's less-than-impressive traction with its non-search products," Spring wrote.