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Napster plans major layoffs after Rhapsody deal

updated 03:05 pm EDT, Tue October 4, 2011

All that could remain from US ops is customer base

Yesterday, Rhapsody announced it was acquiring the US operations of streaming and download music service competitor Napster from Best Buy in a stock swap. Today, more details of the deal have begun to emerge. GigaOM now reports that the merger is expected to lead to major job cuts and that much of Napster's core team will be gone.

According to GigaOM, Rhapsody will close Napster's two offices in Los Angeles and San Diego. Most if not all of its 120 employees will be laid off on December 16. The cat logo used by Napster will no longer be used in the US.

Rhapsody only bought the US side of Napster. For the moment, the Canadian, British, and German operations will continue with business-as-usual. The company, however, has expressed interest in acquiring these businesses from Best Buy as well.

When Best Buy bought Napster in 2008, it had as many as 800,000 subscribers. Since then, its customer base has been eroded by competitors including Apple, to approximately 400,000 customers. It is not clear if Rhapsody will be able to retain these subscribers or they will move over to other download services including iTunes.

by MacNN Staff



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