Feeds

Students refuse to buy a single song from Napster

Rivals cash in

  • alert
  • submit to reddit

Designing a Defense for Mobile Applications

Napster has put a new twist on the notion of being a loss leader. It has actually managed to sell more songs for rival online music services than for its own product, according to a survey conducted by a university customer.

Not a single University of Rochester student admitted to buying a song via Napster during the Fall 2004 semester. Instead, eight per cent of the students turned to the likes of iTunes and Musicmatch to buy songs they enjoy. That's an ominous sign for a company spending millions to seed the university market with music in the hopes of unseating Apple as the clear leader in online music.

Most troubling for Napster, things don't appear to be improving on the music purchase front. During the Spring 2004 semester, a whopping 1 per cent of students did buy tracks off the Nap. Now no one does.

The situation worsens with Napster's small number of specialty "buy only" songs not included with its standard service. Two per cent of students purchased such tracks from Napster, while 39 per cent turned to rival services to secure their songs.

The University of Rochester has boasted about being one of the Napsterized schools that force music rental services on students in the hopes of curbing P2P file-trading. In almost every case, Napster offers such schools a massive discount off its $9.95 per month fee, making it easier for the schools to stomach the cost of opening music shops. The schools also typically receive hardware donations from unnamed sponsors.

Napster has spent tens of millions on a massive marketing campaign, attacking the "$10,000" cost it takes to fill an iPod. (This is a meaningless statistic when you consider that iPod owners are free to add their existing CD collections and those of friends to their device at no cost.) In addition, Napster has subsidized device makers, attempting to create interest in the non-iPod music player market. This strategy left Napster reporting a $24m fourth quarter loss.

A host of companies, most notably Napster and Real, appear convinced that consumers will buy into the concept of renting their music. This strategy requires a massive cultural change in which people must accept restrictions on when and how they can listen to music that is of lower quality than a CD. If you pay a monthly fee forever, you receive all the music one could desire. A decent idea until you realize that most people nurture their music collections to reflect their tastes and don't want access to all the blather ever created.

For the rental model to succeed, Napster and others would, er, have to turn a profit at some point. The companies appear to believe that a critical mass of consumers would deliver black ink.

But in today's reality, hardware makers - mostly Apple - are the ones making serious cash off online music.

The smart choice: opportunity from uncertainty

Next page: Related stories

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.