CD retail giant Best Buy is getting into the digital music business. But unlike other bricks and mortar merchants building their own solutions, Best Buy is partnering with an established brand in the
CD retail giant Best Buy is getting into the digital music business. But unlike other bricks and mortar merchants building their own solutions, Best Buy is partnering with an established brand in the digital space, Real Networks, to launch its store.
Best Buy will use the latest version of Real's Rhapsody digital music service, Rhapsody 4.0, as the engine of its offering, called the Best Buy Digital Music Store.
Under a multi-year alliance between the two companies, the store will be co-branded as being powered by Rhapsody. Financial terms of the agreement were not disclosed but sources familiar with the situation say the two companies will share revenues.
Best Buy is selling individual tracks for 99 cents and an unlimited subscription tier that includes portability for $14.99 per month.
Also as part of the deal, Best Buy will be the preferred retailer of the Sansa e200R, a Rhapsody-branded MP3 player from SanDisk. The device -- which comes in a 2 GB model for $139.99 and a 8 GB model for $249 -- goes on sale Oct. 15.
Consumers who purchase a SanDisk player get a free 2-month trial subscription to the Best Buy service.
Jennifer Schaidler, VP of music for Best Buy, says that the deal is part of the consumer electronics giant's goal of "allowing us to provide an end-to-end digital music solution."
Following in the footsteps of Apple Computer's iPod/iTunes strategy, other retailers of digital music are increasingly looking for complete ecosystem -- both software and devices -- that they can market to consumers. Microsoft will pursue a similar strategy when it launches its Zune digital music player later this fall.
However unlike Apple and Microsoft, tracks purchased or rented through Best Buy work with any Windows Media compatible device.
For Real, the company picks up a powerful marketing partner. Unlike marketing alliances Best Buy has inked with digital retailers in the past, the branding of the new offering will be key to motivating the consumer electronics giant to push the service, Real executives say.