Napster to Merge With Rhapsody

Best Buy, the parent of the company that shook up the music industry before going legitimate, will take an equity stake in the combined entity.

Napster, the dot-com bubble company that shook up the music industry before it was nearly sued out of existence, will merge with Rhapsody, a competing subscription service with rights to 13 million songs.

Napster has been operating as a unit of Best Buy since the electronics retailer bought it for $121 million three years ago, long after it abandoned its illegal file-sharing ways and became a respectable, if not profitable, business.

The terms of the deal announced Monday weren't disclosed, except that it includes Best Buy taking an equity stake in the merged Rhapsody-Napster entity and that the transaction should close by the end of November.

Rhapsody is a music service spun out of RealNetworks that boasts about 800,000 paying subscribers. Napster's user metrics have not been disclosed.

The merged company, though, has its work cut it for it with competition -- in one form or another -- from the likes of iTunes, Spotify, Pandora and Clear Channel Radio's  digital initiatives.