More red ink spills all over online college music scene
Ruckus challenges Napster for losses
A new player has entered the awe-inspiring college music downloading market, giving rival Napster a run for its money or, in actual fact, a run for its losses.
Start-up Ruckus Network, based in Boston, has inked a deal with Northern Illinois University (NIU) to test out its online music rental service. This is the first "big win" for Ruckus in the downloading scene, but, of course, likely another loss for college students and their parents who are being called upon to shell out millions to set up campus music stores for the RIAA (Recording Industry Association of America). Ruckus, like Napster and Real, is trying to convince consumers that paying perpetual monthly service fees to rent music is a better option than buying CDs one at a time.
A grand total of 170 NIU students are testing out the Ruckus software with the school shelling out $5 per student per month for the service, according to the Northern Star campus paper. The price lets students download as much music as they want and to stream as many movies as they want, although none of the content is permanent. Once the students leave the NIU network, their music disappears.
Thus far, Napster has led the college music rental market with eight schools signing up for its service. None of the parties involved in those deals will release specific figures about how much they pay Napster. Most, however, have admitted to receiving huge discounts from the standard $10 per month fee - something in the range on $2 to $3 per student per month. Napster has confirmed that it makes no money off of these arrangement but is using them instead as a way to tempt more schools into signing up for its service. Presumably so it can make money one day.
The RIAA has backed Napster up on this attack. The music label mob promotes the subscription service model as a healthier alternative to P2P networks and has shied away from filing lawsuits against Napster-compliant schools. You could think of Napster as RIAA protection, if you were to stoop to gangster lingo.
To Ruckus' credit, the company - founded by a pair of MIT students - offers a little something different from competitors. It is focused solely on the college market and has software that combines music and movies with chat rooms and other online destinations for students to post pictures or to chat. Also unlike its rivals, Ruckus has shied away from offering a fee to make downloads permanent. Both Napster and Real allow consumers to pay between 79 cents and 99 cents to burn a song to a CD or to transfer it to a device.
"The feedback we received from a vast majority of students was that they just wanted the ability to play music on their computers," said David Galper, a Ruckus co-founder in an interview with The Register.
That logic, however, seems to grate against the hundreds of millions of dollars Apple is making selling the iPod music player. Apple is the only company currently earning significant revenue in the music downloading market, as it has focused on hardware sales and is not offering a subscription service at all.
And Apple's success appears to have the RIAA and others concerned. Neither Napster or Ruckus support Mac computers with their service. This is a disconcerting practice when you consider the high number of Mac users at colleges and add the fact that many of the Napsterized schools tack on the music service fee as a mandatory component of the students' IT costs. At Wright State University, this policy has left close to half the student body paying for a service they can't use.
"I have become a little suspicious about universities and how they do things," said Luke Kenley, an Indiana State Senator. "Students are their captive audience that they are making money off of."
Kenley has been fighting to reduce university costs and is concerned about schools making things such as Cable TV required services.
"It's expensive enough to go to college now without adding these charges, especially when they are mandatory," he said.
And what about the no Mac policy?
"I don't care for that at all," Kenley added.
When asked if Ruckus planned to add Mac support, Galper tossed out a shocking answer. "We are working with the entertainment community on that," he said. This, however, left us wondering what the RIAA had to do with writing Mac software.
"My understanding is that there are some issues around digital rights management involved with that," he said.
Only a moron would think the RIAA is trying to keep Apple out of the college music market because it does not offer a subscription service. The RIAA is happy to welcome all "legal" music options even if it means students won't be tethered to lifelong music subscriptions. Right?
If you read this embarrassing story by Jefferson Graham at USA Today, you would actually think Napster and Ruckus have taken the world by storm and captured the hearts of America's youth.
"About 25 of the nation's 3,300 colleges will offer music to their students on campus networks this fall," Graham writes. "An additional two dozen or more are finalizing deals in coming weeks. 'There are very few things in life that are more important to students than music,' says Penn State President Graham Spanier. 'Any school that buries its head in the sand on this is not serving its students well.'"
Penn State's Spanier has been the RIAA's most obedient lap dog for some time now. He clearly has no problem describing other schools as being irresponsible if they don't open up music stores for his friends at the RIAA. This despite the fact the P2P networks have once again been confirmed as legal and despite a Harvard/North Carolina study (PDF) that found P2P networks have almost no effect on music sales.
Reading USA Today's Graham and others, however, leaves one to believe Napster, Ruckus and the RIAA have already won. Music stores will become mandatory on campus with parents shelling out hundreds of millions to fund the shops. Students will replace their CDs with tethered downloads, and the technology vendors will struggle to make any money off this process, as the music labels skim cash from every subscription sold. Enjoy! ®