What Napster Has That Apple Doesn't

(MoneyWatch)  While most pundits have been busy leaking rumors about MySpace Music, expected to launch this week, Best Buy has made a surprise play with its $121 million purchase of Napster.

Industry watchers are openly wondering why Best Buy would want the struggling music service that many still associate with illegal piracy and things that were cool back in 2000. Of course, most of the naysayers still think of Napster as a subscription service whose files won't play on iPods or iPhones due to Digital Rights Management (DRM) protection. Apparently, few people were paying attention back in May, when Napster announced it was offering its entire six-million-song library for 99 cents a song -- all of them without DRM. (Meanwhile, most songs from Apple iTunes can still only be played on Apple devices.)

As Mac.Blorge reported in May:

Napster has gotten all the major labels like EMI, Universal, Warner, and Sony BMG to sell tracks for free from rights-restriction. ... Several have questioned why Napster has snagged this incredible deal. Music retailers like iTunes, Wal-Mart, and Amazon sell more music than Napster. Currently Apple iTunes is the number one music retailer in the USA. Bill Rosenblatt, DRM specialist, and the president of Giantsteps Media Technology Strategies said, "Record companies don't like dealing with Apple, because Apple is in a position where it can dictate the economic terms and dictate the business model." What's going to draw people away from iTunes? One answer is to get rid of DRM.

Granted, Napster's buggy interface needs work, but in the ongoing battle of music retailers vs. Apple, it seems that the troubled music site actually has an edge: Record labels are more willing to do business with David than with Goliath.