Napster To Compete with Apple iTunes
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 Ã¢€œrentedÃ¢€ 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.