Feeds

Napster pays BestBuy $10m to promote music service

But cash registers will still ring up iPod sales

  • alert
  • submit to reddit

Top 5 reasons to deploy VMware with Tegile

Napster has followed its joint-marketing deal with British high street consumer electronics retailer Dixons by signing a similar promotional arrangement with US giant Best Buy.

In return for promoting Napster as its "leading" - but not, you'll note, 'only' - digital music service, Best Buy will receive $10m worth of shares from Napster's parent company, Roxio.

The promotional activities the pair have in mind include BestBuy offering a co-branded version of Napster via its web site and sponsoring "in-store marketing activities" and "extensive broadcast, print and online advertising".

Since the battle for dominance in the digital music market will almost certainly be won through brand and marketing, deals like this represent Napster's best hope for success.

Apple is committing big marketing resources to promote its iTunes Music Store, and other entrants, most notably AOL, MTV, Sony Connect and the upcoming Virgin Digital, are likely to leverage hardware sales, retail channels and brand awareness to promote their own services.

Napster will find that harder to do, thanks to the inevitable constraints imposed by working at a loss. Roxio's sales fell 17.5 per cent to $99.3m during its last fiscal year, 2004, while its loss ballooned to 348.5 per cent from $9.9m (51 cents a share) in 2003 to $44.4m (162 cents a share). Napster lost the company $9.8m in Q4 2004 alone.

Hence the need to enter into deals with the likes of BestBuy - companies that can afford to undertake the kind of marketing Napster needs but would be hard to undertake itself. Providing a stake in the business saves Napster having to pay out cash and gives its partner an incentive to promote the service.

How well that works out remains to be seen. BestBuy hasn't committed to promoting Napster exclusively. The Dixons deal is exclusive, but from what we've seen of Dixons stores of late, it may as well not be. The retailer seems very keen to sell iPods - thanks to their high ticket prices, no doubt - which are, of course, incompatible with Napster's service. Dixons isn't promoting ITMS, but every iPod it sells is de facto a gain for that service and one more customer Napster can't win.

BestBuy also sells iPods, with the same result.

Other, some of them better, many of them cheaper, portable music players are available of course, but few have had the promotional weight behind them that Apple has given to its machine. ®

Related stories

NTL signs up Napster
Dixons signs Napster promo exclusive
Napster gives away MP3 players
Napster parent Q4, FY loss widens
Virgin Digital sets US, UK debut dates
Apple iTunes Europe shifts 0.8m songs in first week
Peter Gabriel sells digital music firm
HMV iPods not compatible with store's music downloads
Wal-Mart download service goes live

Secure remote control for conventional and virtual desktops

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.