Spanish telecom company Telefonica has made a strategic stake in U.S. music company Rhapsody, the companies announced today.
The move will allow Rhapsody to push its Napster music service into both Latin America and European regions so it can build a presence before some of the other major services establish themselves as leaders. Right now major service Spotify has done an excellent job of expanding across the globe, but has yet to achieve profitability. And Pandora has managed to build a sustainable business model, but hasn’t scaled to other parts of the world.
As part of the investment, Telefonica will shut down its own music service, Sonora, which came bundled with cellular plans offered by the Spanish telecom. Sonora users will now be transitioned over to Napster over the next few months.
The deal will also see Rhapsody open up a new office in Sao Paulo, Brazil to help grow the service and manage future commercial partnerships within Latin America.