So Best Buy is acquiring Napster, the struggling music subscription service, for $121-million. That’s a nice premium for Napster’s shareholders — about 85 per cent over what the shares were trading for before the offer — but they are likely to be the only ones celebrating this deal, I predict (and even so, the stock has tumbled by more than 60 per cent in the past year). The acquisition is obviously an attempt by Best Buy to branch out from the slow-growth electronics business, and there’s nothing wrong with that impulse. But buying Napster is a dumb way to go about it, in my view.

No doubt Best Buy believes that it can somehow magically fix what is wrong with Napster, by combining the service with its deep pockets and existing technology retail business. Adam Ostrow at Mashable says he sees the deal as making sense, and I would argue that he is right — to a point. Best Buy clearly sees Napster as a relatively cheap add-on, considering the company’s stock was barely trading on par with the amount of cash it had on hand ($67-million). But unless Best Buy has supernatural abilities (and the company’s track record in music doesn’t exactly fill me with confidence on that front), I think this combination is doomed.

Why? Because Napster’s problem isn’t a lack of money, it’s a lack of a successful business model. Despite the protestations of those who enjoy streaming music services, including Union Square Ventures partner and noted music fan Fred Wilson, the fact remains that most people don’t want streaming or “subscription” music — that is, music they can’t keep forever. If they did, then Yahoo Music wouldn’t have been such a dismal failure, Virgin Music wouldn’t have shut down, AOL Music wouldn’t have had to be acquired (by who? Oh yes — Napster) and satellite radio companies Sirius and XM likely wouldn’t have had to merge. For whatever reason, people like to own music.

Napster recently launched a download store, in a transparent attempt to embrace an iTunes-style model, but the odds are stacked against the company. Is Best Buy going to suddenly change those odds and compete with Apple and Amazon and half a dozen other services, just because it can bundle Napster with every mp3 player or computer it sells? I doubt it. As Joe Weisenthal notes at PaidContent, Circuit City has tried tie-ups with both Napster and its major competitor Rhapsody in the past, with little or no success. This has FAIL written all over it.

If you read the news about Napster offering non-DRM mp3 files and felt a kind of psychological whiplash from all the ironies inherent in that brief item, don’t feel bad. I share your pain. Imagine: the idea of an online music provider named Napster offering actual mp3 files for people to download. I would have liked to have been in the meeting when someone suggested a strategy that could easily have been implemented (at least technically) almost a decade ago, when the original Napster was just getting off the ground. Instead, we’ve had years of expensive lawsuits and watched the music industry stumble from disaster to disaster.

So Napster — the “new and improved” version — is going to try a Web-only strategy, after the (apparently) somewhat lacklustre response to its subscription-based downloadable software app and service. Smart move or desperate measure? Possibly a little bit of both. Let’s put it this way: it would have been a whole lot smarter, and a lot less desperate, if Napster had chosen to go the Web route a couple of years ago.

But then, what we’re calling Napster is really just a rebranded version of PressPlay, the lame record-company backed service, which was given the name that Roxio acquired out of bankruptcy — a bankruptcy that occurred after the RIAA sued Napster into oblivion and an acquisition by Bertelsmann AG was struck down by the courts. The real Napster died almost five years ago now, and the record companies spent the intervening years suing people and then getting taken to the cleaners by Steve Jobs and iTunes.

I have to say, whenever I see that logo with the cat (or whatever it is) wearing the headphones, I feel more than a twinge of nostalgia. For a brief period in the late 1990s, Napster was the best thing that had ever happened to the Internet as far as I was concerned. I know that it enabled rampant copyright infringement, etc., etc — but it was still a fantastically liberating piece of technology.

Napster says that it is preparing for the day when the major record labels (apart from EMI) finally see the light and start offering their music without DRM (digital-rights management) controls. Unfortunately, that day may never come — and even if it does, Napster is probably not the one that will benefit.

With all the attention Google has gotten for its new music search, you would think the company was going to compete with iTunes.com, or Napster.com — or that Larry and Sergey had set up their own music label. It isn’t the Google Music Store that some have been talking about, and you can’t even click on a link and listen to a streaming web clip of a song. So Google searches for things and then links to them — what’s the big deal about that?

Maybe at some point Google will be able to index audio files and link to them — although that would no doubt become a legal quagmire. Mike over at TechDirt is already speculating about the existing music search getting the company in trouble because it links to lyrics, and the RIAA a music publisher just finished shutting down PearLyrics.com (although there is some reason for hope there, apparently — more details here). In any case, Google Music seems a little thin to be getting so excited about.

Apparently I’m in good company. Fred Wilson of A VC doesn’t think much of it either (Fred, I tried to link to your post directly but the link didn’t work).