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Stoic Napster troubled by Grecian formula

The rise and rise of eMusic

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Last autumn, Napster launched a striking advertising campaign. It drew inspiration from, of all places, the stoic philosophers.

The most memorable slogan was "Have Everything, Own Nothing", and we asked the company about it at the time.

Did Napster mean what it said?

Yes, insisted Alan Cohen, Napster's chief marketing officer.

"In today's world, everything is becoming digital, and digital media is becoming so prevalent that the whole idea of ownership has been questioned," he told us.

Really?

Yes. The idea was that instead of paying $1 to own something, the company had come up with the "provocative" question that you don't need to, so long you can access it.

Napster: 'Own Nothing - Have Everything'

But there's nothing new under the sun. As Paul says of himself in Corinthians 6:9-10 -

"We are treated as impostors, and yet are true; as unknown, and yet are well known; as dying, and see - we are alive; as punished, and yet not killed; as sorrowful, yet always rejoicing; as poor, yet making man rich; as having nothing, and yet possessing everything."

[Our emphasis]

Had Napster consciously borrowed from this philosophy of self-denial?

"No - it's just a new way to think about it," Cohen told us, denying that it had even been borrowed.

Alas, since preaching this radical message, Napster's fortunes have taken a tumble.

Napster's market share fell from 9 per cent to 3 per cent in Q1, according to the NPD Group.

(GeniusWatch: Despite losing almost $200m over four years, Napster was upgraded to "outperform" by PiperJaffrey analyst Gene Munster in ... March).

And who's the beneficiary? eMusic's share during the same period doubled to 13 per cent, making it the No.2 music download service after Apple's iTunes.

Last night at MusicAlly's first seminar of the year, eMusic CEO David Pakman was too tactful to dwell on the comparison, but he was delighted to offer suggestions why.

There's no DRM, and unlike Napster, you don't lose your music when your subscription lapses.

"We don't use DRM, not for philosophical reasons, but for practical reasons: we want your music to work everywhere forever," he said.

Because they're unencumbered by Microsoft's DRM, said Pakman, there are only two services that can sell to the iPod owner: Apple and eMusic, and eMusic preserves your investment once you step outside the all-Apple world.

And Pakman didn't spare the point that iTunes hasn't offered users much more than a dabble in the digital puddle. The average iPod owner has just 21 iTunes Music Store songs on their device.

Worse, he said, iTunes has made the "Long Tail" even more top heavy: 90 per cent of revenues come from 10 per cent of the catalog.

"It's made the music industry more reliant on hits," said Pakman. "If iTunes was the sole model, it would wildly exacerbate the problem."

We'd also suggest eMusic's success also flies in the face of the "Web 2.0" war against expertise, its "cult of the amateur". eMusic makes browsing for music a pleasure, and employs 120 editorial staff to provide guides and reviews. Apple, we were told (and can't corroborate), employs just 16. eMusic is not, as one Register reader memorably described iTMS when it launched, "an airport kiosk without the cigarettes and chewing gum".

eMusic has two problems, he acknowledges. eMusic chooses from the independent sector, because the majors won't let him have songs without DRM. But when the independent sector includes Duke Ellington and Creedence Clearwater Revival - and in all makes up 40 per cent of music market, he reckons - the choice isn't so bad. And eMusic must cap downloads each month for its 200,000 users. "The light users subsidize the heavy users - just like a health club". But it's clearly doing something right.

So where does Napster go from here?

Perhaps another stoic, Epictetus, had some advice when he wrote -

"What difference is it to you who the giver assigns to take it back? While he gives it to you to possess, take care of it; but don't view it as your own, just as travelers view a hotel."®

The smart choice: opportunity from uncertainty

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