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Why Napster will be a fully-integrated flop

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Comment Napster today graced the world with a "revolutionary new way to enjoy music" by starting something called the Napster To Go service. As we all know, revolutions often deliver unintended consequences. So let's have a look at where Napster's service may lead.

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.

You could once buy a CD and then play that music on your computer or in your car at will. Hell, you still can. You own it. You can burn an extra copy of the disc in case it gets scratched or pass along the disc to a friend to see if they like it - just like you would with a good book. Five years from now, you will still own the CD. No one can tell you where and when you can play it.

This is not the case in the Napster subscription world. After six years, you've tossed away $1,076 for something that barely exists. Forget to pay for a month and watch your music collection disappear. (Not to mention, you're betting on the fact that Napster will even exist two years from now. At least you know that a year's subscription to the Wall Street Journal will still work in 12 months time.)

Many of you have stood gloating in front of a might tower of CDs. "Witness my collection," you might think when friends are near. "This is part of me - my identity." You've spent ages picking out solid albums, sorting the strong from the weak.

With music and books, the idea is never to have all that is available. You want what's good. You want quality.

What's the advantage in paying for all of the tethered music on the planet? That's pointless gluttony and nothing more.

Even Napster seems to realize the vacuous nature of the deal.

"A fully-integrated marketing program will support the release of Napster To Go, led by a currently-under-wraps February 6, 2005 Super Bowl television advertisement," it says in a press release. "This will be complemented by the new 'Works with Napster To Go' logo program that enables consumers to easily identify Napster To Go compatible MP3 players at retail."

What is this marketing program integrated into? Is it possible to have a partially-integrated marketing program? Are we to be excited by logos now?

When the bullshit generator goes this far into overdrive, you know there are problems.

Napster plans to spend $30m to promote this new service. That's a cute total if you consider that Apple made close to $14m a day last quarter in iPod sales, shipping 4.6m devices. The only money to be had in this market is in the hardware, and Apple has it all locked up.

Here's hoping consumers will see the light and Napster To Go will go away. ®

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The CD roars back from the dead
Napster launches portable player-friendly music service
MP3.com founder vows unchained melodies
How the music biz can live forever, get even richer, and be loved
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