Digital Music Store Focus – Napster 2.0 <
Napster originated as a peer-to-peer music service in 1999, one of the first that gained widespread popularity. Unlike modern bit-torrent services it provided a connection between users through a central server, and this direct involvement in the file-sharing process rendered it vulnerable to a slew of lawsuits brought by (to name but a few) Metallica, Dr. Dre, Madonna, A&M records and Bertelsmann Gruppe.
These lawsuits culminated in Napster’s bankruptcy, and its purchase at the bankruptcy auction by Roxio (of CD burning fame) – who have converted it into a subscription streaming service. Users can pay GBP£5 a month for unlimited streams from Napster’s 8 million strong catalogue, plus 5 tracks to download and keep as MP3s. There’s also the option to buy download tracks on an a-la-carte basis once you’re subscribed. In addition to this, Napster also provides a free streaming site, with limited functionality, and access to three quarters of its catalogue. Users can’t make playlists from this site, and it’s a lot slower and harder to use than the subscription platform.
The subscription service is cheaper than Spotify Premium or eMusic, its closest competitors in terms of service, and the fact that all of Napster’s members are subscribers makes it’s income much more reliable than the advertising based model that still makes up the bulk of Spotify’s trading, (the Economist reported that only 40,000 of the 6 million users who had downloaded the free platform have subscribed to the premium service) and thus better able to provide a steady income to it’s contributing artists, were it not for the odd addition of it’s free streaming service to the mix. Napster’s operations seem a little confused, different elements pulling in different directions from one another; a steady income from the subscription service, with a clunky ad supported option detracting from it; a limited MP3 download service clashing with both and yet failing to make it easy for users to take music away from their PC’s. If they could centralise all of these elements into a neat platform and make it easy to use, they’d have a model that looked a bit like Spotify’s, but it’s yet to be seen whether that can be turned into a profitable business in the long term.