Napster Struggles for Marketshare, Adopts New Pricing Model

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Los Angeles-based Napster, now a legal music site, has a mere 270 000 subscribers and struggles to attract new users. In an attempt to differentiate itself from Apple’s offering, Napster will relaunch its online subscription service under a flat rate pricing model. Users will soon be able to download as much as they like from a library of 1 million songs for $US15 a month.

Alan Cohen, chief marketing officer for Napster, told reporters ‘the 99-cent-download model will be a thing of the past’:

Why would anyone spend $10,000 with Apple to get 10,000 songs when they could have 10,000 for $US15 a month from Napster? The flaw in the argument is that most buyers have iPods and most buy only a few hundred songs, making $US15 a month for rental of Napster’s library not as cheap as it sounds.

It’s interesting to see just how much Apple is benefiting from locking down their proprietary digital rights management API. The very technology that hinders and frustrates users of their products is seemingly being used as their primary draw card. Apple exploits FairPlay both defensively (to prevent distribution by casual users) and offensively (to provide a disincentive for users switching to alternative products). The effect is to create an artificially-supported market for their iPod while discouraging users from trying other music services.

The irony is all too clear: just two years ago, Apple was themselves conducting their famous ‘switch’ campaign. Now — like they accused Micrososft of doing - they’re using technology to monopolise their market and maintain an immobile user base. Customers at Apple’s iTunes Music Store are now unable to change their digital audio player, effectively locked into a single hardware and software platform if they want to continue listening to songs they purchased. I fear that — unless Apple begins licensing their DRM technology to other music stores — the online music market will falter and stagnate.

Source: Garry Barker, The Age