Rhapsody, one of the oldest Internet-based music subscription services, has acquired Napster and its assets from Best Buy while the retailer will get a minority stake in the combined company.

Rhapsody which has more than 800,000 subscribers is the largest online music service in the U.S. while Napster has around 200,000 to 300,000 subscribers. The acquisition will allow Rhapsody to stay ahead of its competitors in digital music like Spotify, MOG and Rdio.

"Scale is extremely important in this business," said Rhapsody International Inc. President Jon Irwin.

"It helps us to have the resources to stay up to date and expand, to build new partnerships, and to accelerate the network effect on social networks."

Best Buy acquired Napster back in 2008 for $121 million but the music service has struggled since its days as the original free music-sharing application in the 1990s. The retail giant has unsuccessfully tried to market the music service in its stores but subscription still continued to slide. From nearly 700,000 subscribers, Napster subscription has dwindled to 300,000.

"Napster looked like an attractive purchase at the time, but it didn't do much for Best Buy at all," Gartner Inc. analyst Michael McGuire said.

The music industry has been beset by financial troubles in recent times with consumers opting out of buying CDs and looking for free illegal downloads instead. Competition in online music services is fierce with Apple's iTunes dominating sales. Other free service like Spotify, which supports itself by paid advertising also, makes life harder for paid services like Napster or Rhapsody. Rhapsody is hoping to get new users by offering a free 30-day trial but it remains to be seen if users will stick around after that trial period is over.

Rhapsody and Napster are two of the oldest and most known brands in digital music. Rhapsody was acquired by RealNetworks and later became a joint venture between the digital media company and MTV Networks. Last year it spun off into an independent company with RealNetworks and MTV still holding minority shares.