Best Buy agreed to buy Napster's outstanding shares for $121 million, a 95 percent premium over Napster's closing stock price on Friday, before the deal was announced. However, Napster has tens of millions in cash, thus Best Buy will only actually pay around $54 million net of cash and equivalents.

Napster currently has around 700,000 subscribers to its music service and also sells DRM-free MP3 tracks. Best Buy said that it is interested in Napster's proven technological capabilities, as well as the former peer-to-peer pioneer's user base. The mega-retailer wants to explore digital music and other forms of entertainment "beyond music subscriptions" over a variety of electronic devices, Best Buy claims.

The retailer also highlighted Napster's easy-to-use interface, streaming music and mobile offerings as the service's key strengths. There were also some critics of Best Buy's move, but they are apparently failing to understand the retailer's size and goals. Best Buy does not want to dethrone iTunes in the near future, folks.

In May, Napster made a bold move meant to revive its operations. The company started selling DRM-free tracks for 99 cents, a price that put it in direct competition with Apple’s iTunes. Unlike iTunes, which mostly sells tracks in a restrictive format, Napster offered MP3 tracks that can be played on any device.

The decision to convert single tracks, as well as albums, into MP3 format, followed the steps of three of the world’s largest recording companies, Universal Music Group, Warner Music Group Corp. and EMI Group PLC, who submitted to the highly popular MP3 demand for music tracks.

While Amazon already was selling music without copy protection, Napster hoped it will have a greater success because its title library of about 6 million tracks was larger than Amazon’s, and Napster is a better known name when it comes to online digital music. However, the company was still struggling to dent iTunes' market.

The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008. Apple’s iTunes surpassed Wal-Mart, which had the first place in March.