Napster To Compete with Apple iTunes

Napster launches portable ‘rented’ service (FT)

Napster, the online music service, on Thursday launched a new portable subscription service that some observers suggest could pose the first significant challenge to Apple Computer’s iTunes music store. Napster’s new service would let subscribers download an unlimited number of songs and play them on compatible digital music players for as long as customers pay a $14.95 monthly fee. Other “rented” music services have only allowed subscribers to play their music on their computers. Apple’s popular iTunes store, on the other hand, sells songs for 99 cents and enables customers to play their music on their computers or iPod music players. Napster will launch a $30m advertising campaign on Sunday.

The new service, which has been available through a limited preview since September, is the first major iTunes competitor to make use of new software from Microsoft that monitors music files on digital music players and can determine whether the subscription with which they were downloaded has lapsed. The service will be compatible with portable music players from a wide variety of manufacturers such as Creative, Gateway, Dell, iRiver and Samsung but not with Apple’s iPod.

MTV details Napster’s pitch:

A $30 million ad campaign for the service will launch during the Super Bowl on Sunday. “Introducing the world’s first portable music service,” reads an ad on Napster’s official site. “Now you can fill and refill your compatible MP3 player without paying 99 cents per track. Get all the music you want in a whole new way.”

The “99 cent” jab refers to the typical per-track cost of Apple’s iTunes download service, which currently holds approximately 70 percent of the download market. The campaign urges people to compare the cost of spending $10,000 to buy and transfer 10,000 songs from iTunes to an iPod, versus Napster’s $14.95 per-month fee to do the same with an unlimited number of the service’s million-plus tracks, according to a Reuters report.

The Register‘s Ashlee Vance does the math and explains, “Why Napster will be a fully-integrated flop.”

On the surface, the To Go model looks like a great replacement for Napster’s previous subscription service. In the past, customers had to pay a monthly subscription fee that allowed them to rent as much music as they liked. Users then had to pay extra to download permanent versions of songs that could be transferred to a device or CD. Now, $14.95 per month lets you download as much music as you like to your computer and/or device.

The big detractor, however, is that you still don’t own the music. You rent it. Stop paying the Napster tax man, and all your music disappears. This forces you to make a choice between quantity and permanence. Pay Napster every month and gain access to an almost limitless supply of music or buy select CDs, as you have in the past, and own them for years. From where we sit, the math doesn’t break down terribly well in Napster’s favor.

Let’s take a look at consumer A. This consumer goes to Amazon.com and does a search for Creative – one of the Napster supported music device makers – and picks up a 20GB player for $249.99. Let’s assume he keeps the device for three years, paying Napster all the time. That’s $538 for the Napster service, bringing the three-year total to $788.19.

Consumer B types iPod into the Amazon.com search engine and finds a 20GB device for $299. Apple doesn’t offer a subscription service, so this customer has to buy songs at the 99 cent rate or at $9.99 per album. Subtracting the price of the iPod from the $788, consumer B would have $489 left over for music. That’s roughly worth 489 songs or 49 albums.

We posit that during this three-year period both Consumer A and Consumer B will actually end up with close to the same number of songs on their devices. Customers do not, as Napster suggests, pay $10,000 to fill their iPods with 10,000 songs just because the capacity is there. They take their existing music, CDs and MP3s, and put that onto the device first, then later add iTunes songs as they go along. A Napster customer would have a similar mix of old music and new downloads. The big difference here is that after the three years are up, Consumer B has something to show for his investment. He still owns the music. If the Napster customer stops paying for the service, his music is all gone. He’s paying $179 per year to rent music. This isn’t high quality stuff either. It’s DRM (digital rights management)-laced, low bitrate slop.

A big drawback, indeed. Of course, as I understand it, iPod has some rather serious technical limitations as well, including the bizarre inability to transfer songs from one’s iPod to another iPod–presumably including an upgraded model one purchased for oneself–or even to a PC.

Still, PC World Editor in Chief Harry McCracken is right about one thing:

The “Napster” music service–I use the quotes since its current incarnation has almost nothing in common with the legendary peer-to-peer file sharing service . . .

Quite true. I agree, too, with his advice:

Me, I’m still mostly going a third, somewhat archaic route: I’m buying CDs and ripping them to a PC, then transferring them to the iPod. The biggest reason: A lot of the music I want to listen to still isn’t available from Napster, iTunes, or any other service. Besides, a CD remains one of the most flexible music storage formats: Once I’ve ripped it into MP3s, I can move tracks to any portable player. (iTunes music’s copy protection means it’s extremely iPod-specific unless you burn it to CD and re-rip it.) And in a world in which hard drives still get fried, I like the permanent feel of having a collection of CDs stored away. So maybe I’m a dinosaur, but I don’t fully buy either Napster’s pricing model or Apple’s. How about you?

Of course, I’m still not willing to pay $300 for a glorified Walkman that requires me to use a cassette tape converter to play the music in the car (presuming I still had a cassette deck in the car, which I haven’t in five years) and another unit in order to play it at home.

FILED UNDER: Economics and Business, Popular Culture, Science & Technology
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. bryan says:

    James, it’s far more than a glorified Walkman. Your PC-centrism is showing heavily.

    The iPod is also useable as a portable firewire harddrive. There are games available, and a host of other software that I honestly don’t bother with.

    Further, you don’t have to have a cassette connector. There are also FM transmitter accessories. I have one and it works pretty well. Also, from what I understand, you can buy a BMW that will come with an iPod connector built in. In fact, I understand that car companies are now talking about ways to incorporate mp3 player connections into car stereos – something they should have done a long time ago, like by installing a hard drive into the stereo along with the CD player.

    As for tranferring music, all of the music on teh iPod comes from the computer, so there’s always the original to use to transfer to another iPod.

    But more to the point, I have purchased several audio books from Audible.com that I listen to on my iPod when driving to and from Columbia. I much prefer the iPod to having to transfer the three CDs for “America the Book” into the car CD player.

    I assume the same is true of other mp3 players as well.

  2. Paul says:

    James James James James…

    It’s not a glorified Walkman… It’s a way of life.

  3. Alex Knapp says:

    James, ignore the iPod crowd.

    http://hereticalideas.com/index.php?p=2715

    The Creative’s cheaper, has more HD space and more options. Plus, for 30 bucks, you can get an FM transmitter unit that let’s you play it in the car and at home.

  4. Allan Guyton says:

    The same $30 will get you audio RCA connectors that let you plug your iPod into your home stereo, where it sounds just great.

    Apple was in fact a late entrant to the digital music arena, but they’ve done their homework.

    Try the respective players out.

    The iPod just works better.

  5. Mike Trettel says:

    I don’t doubt that Apple’s done their homework, but Creative has done theirs too. It’s trivial to hook up a Zen to a home stereo with the appropriate connectors. USB2 is more widely used than Firewire, and the Zen makes a fine portable storage device. The Zen is Linux friendly (yes, some people do look for this), with a mature and stable application being available for music and data transfer. The equivalent for use under Linux doesn’t support the same feature set (yet), although that can change quickly. As to using an FM transmitter to connect any MP3 player (iPod, Zen, or whatever)to a car stereo, well the better way to do it is to use a FM modulator to create a dedicated hardwired connection. The FM transmitters are an easy and painless way to use an MP3 player in a car, but the performance leaves quite a bit to be desired if you’re driving in an area with strong FM signals in the band that you’re using.

  6. Bithead says:

    I solved a lot of those problems some time ago.
    I keep a laptop computer in my truck at all times, and it has perhaps 10gb of MP3’s on file. I use WINAMP and keep it in random mode.

    As for more permanant storage, I had already dealt with that; All my stuff is either ripped from CD’s or Vinyl…. (I have around 20,000LP’s in my basement) and store them, in MP3 format on CD, before I do anything else with them. This allows for quick transfer to whatever format I need.

    I’ve never bothered with any of the commercial music services.

    Oh, one more thing; I’ve been experimenting with saving audio streams of SMOOTHJAZZ.COM of late. At their 128kb/sec stream, I can get 6 hours on a single MP3-CD.

  7. Rich says:

    I don’t understand your comment about the iPod’s “bizarre inability to transfer songs from one’s iPod to another iPod.” The music on your iPod syncs up with the iTunes library stored on your Mac or PC. When you get a new iPod, you hook it up to that computer, set it up, and iTunes will move all your music to your new iPod. Easy. The transfer is one-way by design, so you can’t move music from the iPod to your computer (at least, not without third-party software) because otherwise the RIAA would have kittens.

    There are also a number of ways to play the music from your iPod to your stereo.

    First, if your stereo has a jack that’ll accept a mini-stereo cable (like the kind used by headphones), you can run that from the headphone jack on the iPod to your stereo.

    Second, you can use audio RCA cables and this adapter

    There’s at least two FM transmitters that I’ve used as well, the Griffin iTrip and the Newer Technologies.

    In that case, you don’t need the cables either. Just tune to the right frequency. That’s how I listen to my iPod in the car.