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Rhapsody ropes Napster Intl. into fold

Music-streaming service looks to amp up competition in Europe

Rhapsody is invading Europe.

The music-streaming service has acquired Napster Intl., which will notably expand the company’s footprint in Germany and the U.K — both important beachheads as the company joins the larger fight for international auds.

Move follows the October 2011 acquisition by Rhapsody of Napster’s U.S. operations from Best Buy, completing one of the first major acquisitions of one streaming service by another.

“The acquisition of Napster and its subscriber base in the U.K. and Germany gives us an ideal entry to the European market,” said Rhapsody prexy Jon Irwin in a statement. “Through the benefit of scale, the strength of our editorial programming and strategic partnerships, we can now bring the Napster service to even more consumers on a variety of platforms.”

The overseas move by Rhapsody comes as competition is on the rise among digital music companies, with U.S. service Rdio having launched in Germany earlier this month. The U.S. launch of Spotify and the IPO of Pandora in 2011 (along with the launch of Amazon Cloud Player, Sony’s Music Unlimited and Google Music) have already done much to redraw the domestic playing field.

The growth rate of streaming music services is huge. The Intl. Federation of the Phonographic Industry said subscription services grew to 13.4 million subscribers in 2011 from 8.2 million in 2010 — a 65% increase. Major international music services are now in 58 countries, up from 23 a year ago.

International music lovers are embracing the streaming services even more than U.S. audiences, too. In Sweden, the birthplace of Spotify, streaming sites accounted for 84% of digital revenues in the first 10 months of 2011, said the IFPI. Other markets saw similar spikes in subscription revenues. France, for example, saw a growth rate of more than 90% in the first 11 months of 2011.

Launched in 2001, Rhapsody is the largest premium subscription music streaming service in the U.S., boasting more than 1 million paying members. But with the entry of Spotify and other global services, the company has been under pressure. (Spotify claims 2.5 million paying members in 13 countries.)

Napster, to some, is still best known for kicking off the digital music revolution by allowing peer-to-peer sharing of MP3 files in the early part of the decade. The majority of that sharing was of pirated copies of songs, but the site was later retooled as a music streaming service.

The name recognition remains strong, though, especially in Europe. As a result, Rhapsody doesn’t plan to do away with the Napster name as it did in the U.S. Users will be migrated to the new service in March.

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