Thursday, February 03, 2005

Napster To Go

As per today's news, Apple should be afraid:
Napster's promotion includes a Super Bowl television spot urging fans to compare the costs of spending $10,000 to buy and transfer 10,000 songs from Apple's iTunes store to an iPod, with the $15-per-month fee to carry songs from a catalog of over a million tracks on Napster-compatible players.
Especially with the oncoming deluge of slick devices like the Creative Zen Micro supporting Napster To Go, how long can the craze last? Do people get iPods for the music (something that any player can provide) or for the branded experience?

Afraid, that is, if not for the iPod (I know this isn't exactly new analysis). Think about this: Apple has sold and given away more than 250 millions songs on iTunes. Despite all the fuss over online music, 250 million songs at most brings in 250 million in revenue, and this is a stretch, as Apple is always giving away free songs. Based on the 10 million iPods sold, 250 million looks more like 25 songs per iPod. Of all the 55 songs I've downloaded from iTunes, about half of them were free. Considering that the typical iPod holds 5,000 songs, you'd understand that it's not the necessarily the legally downloaded music people care about when they buy into the iPod culture.

FULL DISCLOSURE: I've replaced my GTC stop loss order to activate at 65 with a one day order to activate at 75. I hope it doesn't go through.

READ: Reuters


Monchanger said...

I'm not sure I agree with you on Apple losing money here. Did you miss the following line?

> *It is necessary to maintain a Napster subscription in order to continue access to songs downloaded through the Napster service.

So, sure you can have fill your player for a mere $15. But if you don't keep forking over that amount every month, you're left with nothing. At least Apple is actually selling you something (e.g. a usage-license), rather than renting it out. And last I checked, we're all caught up in some silly notion of an "ownership society".

Will said...

I analysed how Apple doesn't make that much money from iTunes anyway, relative to how much it makes from iPods. But as my disclosure demonstrated, I wasn't totally confident that Apple wouldn't get hurt by the news. As for why people would stay away from Napster To Go, you're thinking is right on target.

As a counterpoint, people who like trying out music should definitely subscribe to the plan. I'd suggest buying the songs you really like in CD and just switching songs you don't like. This might get a bit confusing, but is definitely a plausible and valuable option for people who listen to a lot of music a lot.