Napster Pre-Paid Cards

[MacRumors]

Napster will be offering (http://www.forbes.com/business/newswire/2003/10/27/rtr1123260.html) prepaid cards for sale at retail stores for use with their relaunched digital music download service.

The cards will cost $14.85 and provide the purchaser with 15 downloads. The cards are targeted at teenagers without credit cards. They will become available by mid-November at retailers across the country -- including CompUSA, Best Buy, Safeway and even Rite Aid.

Napster is due to relaunch on October 29th.

[Archmage]

I would love it if Apple offered their gift certificates in physical stores.

edit: First post! Wow! :)

[LimeLite]

While I obviously think iTunes sets the bar, this is actually a pretty good idea.

[arn]

I'm surprised Apple hasn't done this. They have the technology in place now with gift certificates/allowances etc...

They have the retail presence, too.

arn

[dricci]

I wouldn't be surprised to see Apple start doing something like this soon. Everything is in place, software-wise.

Edit: whoa, lots of other posts before I clicked submit :D

[Eric_Z]

Am I the only one who dislikes this idea?

I mean running away to a recordstore just so that you can download music instead of sitting in the comfort of your home and download illegal music, I don't think so.

If you wan't people to download and buy there music legaly it HAS to be simpler or just as simple as pirating, something that Aplle eccels at and Napster is missing by a mile with this initiative.

[alset]

Dang! I had hoped Apple would be the first to do this. This will be a hot ticket for parents and grandparents who don't want to risk buying the wrong thing for a fickle teen.

Imagine this at BestBuy or available online via web. The sales would be great.

Dan

[mproud]

I like the idea, though I don't think people aren't accustomed to the music store business quite yet. Maybe this holiday season - we will see.

But yes, come the holidays, Apple needs to get some iTunes Cash Cards in the stores.

A $9.99 card, good for 10 songs or 1 album - easy and simple. I like that.

[johnnowak]

-SMART-

This really makes a great gift idea... if it was the ITMS that is.

[manitoubalck]

Who would have guessed it but NAPSTER lives. Though I still will be freely downloading the songs I want, and buying a CD when I want the whole album.

Goodluck to the fellas though, they've been through some tough times:)

[LimeLite]

Originally posted by mproud
A $9.99 card, good for 10 songs or 1 album - easy and simple. I like that.
I like your plan.

As for running off to record stores...who said anything about record stores? This would be a good thing to have at say, the checkout of a grocery store. Kids could either get it just by going to the store, or by convincing their parents to pay 14.85 to shut them up.

As for Napster living...not quite. It's just the name that was bought up for the recognition.

[Vonnie]

Seeing most teenagers here are buying prepaid cards in stores for their cellphones, instead of taking a subscription, this napster-prepaid-card will probably work pretty well. I hope Apple comes out with something similar, oh and a European Music store goddamnit!

[manitoubalck]

Is there any news on how wide spread this offer will be? Only US or to Europe/Asia/Africa/Australia?

[scottlee]

Not a bad idea for those people who are still freaked out about the idea of releasing the credit card info to the internet or their children.

[Jerry Spoon]

The big thing I've ran into with some pc using friends is that they're still using an old operating system though. How frustrating for grandma to thing she's being hip by buying all her grandkids gift certificates to ITMS and then finds out they're all running Windows ME.

[DeusOmnis]

Dont call it a napster "Relaunch", it's not even napster.

They should call it fakester or something like that.

[the_mole1314]

Think about it:

Your granny can't use, or owns a computer, and wants to give you music. She can give you an iTunes Gift Cirtificate from the Apple Store or local outlets. See, it works! I think this will help Napster a lot in market share.

[Tux Kapono]

I thought Apple was already rumored to be doing this. It was posted on one of these rumor web sites...

[TMay]

These stores that are selling them need to make some money on them. Their little piece of the action subtracts from the bottom line. Now if you believe that Apple isn't all that interested in the bottom line for iTMS, then we will see these available for sale.

Why not just have a kiosk then, and get an instant download, instant gratification?

[reedm007]

Originally posted by TMay
These stores that are selling them need to make some money on them. Their little piece of the action subtracts from the bottom line. Now if you believe that Apple isn't all that interested in the bottom line for iTMS, then we will see these available for sale.

Why not just have a kiosk then, and get an instant download, instant gratification?

Exactly what I was thinking!

I was also wondering about selling at stores like Best Buy who already make a lot from music sales. Sure, the online music business is so small right now it'd hardly make a dent, but in the long run, what's in it for Best Buy to sell pre-paid cards? They can't possibly make as much money selling those as they can selling CDs, no? Because it's like we're dealing with 2 different retailers... It's a bizarre concept in a way. If Best Buy did it, it would be like:

- Best Buy sells CDs.
- Circuit City sells Best Buy music gift certificates, and their own music.

What!?!?

[iEric]

Wow thats such a good idea. I hope Apple does something like this. But then Napster might come back with a lawsuit...and here we go again :rolleyes:

[1macker1]

This is a great idea. When the technical inept grandmother is out shopping for gifts for her grand kids, all she has to do is throw this card in the buggy, no need to set up a gift certificate on the computer.

[evilbert420]

Why not just buy the music when you're at the store?

I mean, really.... that's kind of ridiculous to me to go TO a brick-and-mortar store to buy a gift certificate to a virtual store. Isn't that missing the whole point of a virtual store?

I understand the 'grandma" angle... but I still think it's a dumb idea. Unless, of course, they do it at Apple stores. ;)

[xtekdiver]

Originally posted by arn
I'm surprised Apple hasn't done this. They have the technology in place now with gift certificates/allowances etc...

They have the retail presence, too.

arn

Imagine the cool pictures they could put on the cards too. It would be a nice way to advertise and show off the elegance of their other products. I agree with other posters, this is a good idea and would dovetail nicely with Apple's gift certificates. Emails are so "virtual".

[Nutzoids]

Correct me if I'm worng but isn't Apple giving away songs...FOR FREE? 100 Million Free and legal downloads with Pepsi...If you ask me I would rather drink a 20oz Pepsi and enjoy some free music...just me...it's like a pre pay card that comes with a free Pepsi...WOW!

[Kid Red]

I'm sorry but because it's Napster that's doing it, this is stupid and funny.

[Frisco]

I think this is a great idea and hope that Apple copies this idea.
Apple would make a really cool card that looked like a real credit card so all kids would show them off.

Okay everyone who thinks these cards are a good idea send Apple an e-mail--please?

[Digipimp]

This is exactly what I said Apple should do on this board about 4 or 5 months ago was sell cards like a prepaid phone card or gift card inside their stores and other stores that carry Apple product so that they can hit people who don't have credit cards. It's a great little gift, do something like $10, $20 and $50 cards for sale, but they have been to slow to move on this one. Oh well hopefully they'll get with it before Christmas which is sure to be the time that the sales for it would be ideal.

[Jerry Spoon]

Originally posted by TMay
These stores that are selling them need to make some money on them. Their little piece of the action subtracts from the bottom line. Now if you believe that Apple isn't all that interested in the bottom line for iTMS, then we will see these available for sale.

But these could be sold at Apple's online store or in their brick and mortar stores. Don't you need ITMS to buy the gift certificates now? If your relative doesn't have a computer or an OS that runs ITMS, then this would be another viable option.

[flipflash77]

Originally posted by Nutzoids
Correct me if I'm worng but isn't Apple giving away songs...FOR FREE? 100 Million Free and legal downloads with Pepsi...If you ask me I would rather drink a 20oz Pepsi and enjoy some free music...just me...it's like a pre pay card that comes with a free Pepsi...WOW!

You're right and wrong... Yes they are giving away 100 million songs with Pepsi products, but this won't start until the Superbowl in February. That would completely miss the holiday season, and Napster would entrench themselves in the pre-paid purchase card for music channel. As awesome as the Apple/Pepsi deal is, it isn't out now and won't be for four more months.

[flipflash77]

Originally posted by evilbert420
Why not just buy the music when you're at the store?

I mean, really.... that's kind of ridiculous to me to go TO a brick-and-mortar store to buy a gift certificate to a virtual store. Isn't that missing the whole point of a virtual store?

You are slightly missing the point. For one, it's aimed at those who don't have credit cards. Two, it's a great impulse item. Three, one reason music downloads have become so popular (aside from being 'free' via piracy) is because people don't want to pay $15 to buy a CD when all they want is ONE song.

So yes, you could go to a store and drop $15 on a CD that has 1 good song and 14 pieces of crap. Or you could go get a prepaid card for $15 and download 15 songs you actually want. It is a little counter-productive to go to a store specifically to buy a card to go home and buy something, but if you had a credit card you would just buy it online and this whole discussion would be meaningless.

Regardless, it's all about giving consumers choice. You may think it's dumb, but obviously a lot of other people don't. By not doing something similar, Apple would be limiting their potential consumer base. There is a large segment of the populace who buys pre-paids cards. Cell phone minutes, long distance, gasoline, regular merchandise, food cards, etc. People eat them up.

[sabbath999]

Retailers want to make money on what they sell.

Which means, they NEED to have a good profit on these items. Brick and mortar stores have a lot of overhead, they need a serious mark-up on products just to survive. Let's take, for example, a discount record store seller (Best By, Circuit City, Wal-Mart), etc.

These guys are currently making about 40 points on their items (40 percent mark up). The only way they are going to put these cards in their stores (cards that will reduce the number of physical album sales) is if they get some good markup on them.

Let's say Napster is able to convince the store to do it at a discounted rate of 30 percent markup (doubtful). That means that Napster discounting their product 30 percent to the reseller, and are only getting 70 cents on the dollar for songs.

If what we have heard is correct, if the music companies are getting 80-90 percent of the revenue, then Napster will lose money on every single song they sell.

That may work for a while, as a loss leader kind of thing, but there is no way it will be a long term solution.

People do not open a business to lose money.

[OziMac]

Hey, making money aside, I think there are some licensing issues here too.

No one from outside the US can buy songs on iTMS. In fact, no one from inside the US can either if they don't have a US credit card and billing address - a problem that grates with me right now during my visit.

By making prepaid cards available at bricks and mortar stores, Apple would allow non US consumers indirect access to the iTMS. As it is, they can't buy the gift certificates or allowances since they are located or have credit cards outside the US. Thus I guess Apple maintains its liberal DRM policy within the US without compromising it by allowing people outside the US to have the same access rights (obviously part of the current deal with the labels - harsh, but fair enough from their busines spoint of view).

On a similar note, I read somewhere that you can buy prepaid credit cards from 7-11 and use them on iTMS - anyone tried this with any success?

[jxyama]

i agree with most of you that apple should adopt something similar. this is a good idea.

however, there's one difference if apple copies this... iTMS is already an established business. (or as "established" as there is in the online music business)

napster service is yet to start. whether intentional or not, i'm glad apple has waited until they have some credibility to their service before expanding - like their "allowance" system or gift certificates.

where's buymusic.com now? those tommy lee ads look rather comical nowadays, no? i'm not saying napster will go the same route (i.e. not very successful) but i find it rather shady and tricky that they are selling prepaids before the service is even up. kinda cheap way to start a business if you ask me...

edit: ok, i read the article wrong. i guess it's not available until two weeks or so after the launch. still, that's far from firm establishment... let's see if how many songs they will sell by mid-Nov. my guess is that it will not be millions like iTMS. (just like buymusic.com - which, AFAIK, hasn't made any announcements about the number of songs they have sold, probably meaning they've sold very little.)

[jxyama]

Originally posted by sabbath999
Retailers want to make money on what they sell.

Which means, they NEED to have a good profit on these items. Brick and mortar stores have a lot of overhead, they need a serious mark-up on products just to survive. Let's take, for example, a discount record store seller (Best By, Circuit City, Wal-Mart), etc.

These guys are currently making about 40 points on their items (40 percent mark up). The only way they are going to put these cards in their stores (cards that will reduce the number of physical album sales) is if they get some good markup on them.

Let's say Napster is able to convince the store to do it at a discounted rate of 30 percent markup (doubtful). That means that Napster discounting their product 30 percent to the reseller, and are only getting 70 cents on the dollar for songs.

If what we have heard is correct, if the music companies are getting 80-90 percent of the revenue, then Napster will lose money on every single song they sell.

That may work for a while, as a loss leader kind of thing, but there is no way it will be a long term solution.

People do not open a business to lose money.

one thing you missed is that prepaids are just that, prepaid $$$. napster will get to hold onto that $$$ for a while and the interest it will generate.

paypal makes good amount on just holding the money.

[FlamDrag]

The "granny factor" is a bit over-estimated in my opinion. Granny isn't going to have a clue what the heck this type of gift certificate is going to be used to buy. Granny is more likely to just get a Gift Certificate to Best Buy than a Napster Gift Certificate.

This sort of thing at a gas station / grocery store makes a lot more sense to me as an impulse buy by kids who know.

All in all, I like the concept; I'm curious about the economics of it.

[imbriumink]

I don't know how anybody can feel negatively about this. Just because another company came up with something before Apple doesn't mean it's bad. Prepaid cards are very appealing to kids. If I had no credit card what else am I going to do? These cards wouldn't be in music stores so I don't know why people are commenting on the stupidity of it. Having them in grocery shops makes it a great impulse buy. As for the stores getting a cut, I don't know how it works right now, but at my Safeway back home, I can already buy gift certificate cards for Nordstroms and other department stores.
The cards are also a form of advertising for people such as myself who don't watch TV. Not that the iPod commercials promote the ITMS right now.

[ITR 81]

The idea is nice one but if your at CD store why buy cert. to a virtual one? Maybe if it is a Apple store or one of the other major chains they are selling through.

To me if folks have iTunes already they can make cert. now and just send them online cheaper and faster normally.

I think it be good idea if they keep it just to Apple and computer related stores only because as soon as you put it in with norm. CD store that just misses the point with me.

[MacFan25]

I'd love to see Apple do something like this. I think they could sell a lot of them, and it would help get more word out about the store.

[LimeLite]

Originally posted by ITR 81
The idea is nice one but if your at CD store why buy cert. to a virtual one? Maybe if it is a Apple store or one of the other major chains they are selling through.
Ok, read all the posts before you post something please.

I will say it again: The cards are not designed to be sold at a record store! I don't know why people keep saying that if you're at a record store why would you buy this. Who said anything about having them at record stores? They talked about electronics stores and grocery stores, which are a great idea. I love Apple, but that doesn't mean we can't congratulate another service on a good idea. You all seem to forget that competition is a fantastic thing, because it makes both sides work harder to improve.

And as for them starting to sell these cards too early: sorry, but your not looking at the big picture. How often do you get free advertisement for something on the internet by having something available for sale in a physical store? So far, the only way people for Windows know that there's both an iTunes for Windows or the iTunes music store for windows, is from being online or if they happened to be told by a friend or someone in an Apple store. That's not a that much exposure. There are tv ads for the iPod, but once again, that sends them either online or to a store, which is where they'd have to go to learn about iTunes.

Having these cards in all these different stores does two things: it gives them money from people purchasing them, and it gives them exposure. Assuming that these cards will be hung in the checkout lane, most people scan those lanes for last minute impulse purchases, or while they're waiting for someone in front of them to count out $5 in pennies. They'll notice the cards. And even if they don't buy them, Napster has now succeeded in letting people know they exist.

[crazytom]

Didn't Apple announce gift certificates and 'allowances' ...in the last couple weeks? It's advertised in iTMS (http://www.apple.com/itunes/store/) ... or have I just entered the twilight zone?

Edit: yes, I am missing something...you're talking about availability in 'physical' stores.....:o

[balconycollapse]

Cards? Why not?!?!? I can see the points made by many about the "bottom line" and losing money by selling these cards. But, i also have to agree with the idea that advertising is worth whatever cost. Work in retail long enough and you do odd things like selling for a loss to gain customers or just get them into the damn store! It'd be ideal to have the cards right next to the iPod. Or have a giant Yao Ming holding some in his hands with an ipod in the other. Retailers would gladly sell them if there is a chance of selling an ipod too. Also something practical like a solar clock built into the card would be great for justification of the purchase. Make it "look" like an ipod.
Make no mistake though the Pepsi/Apple deal is an absolute blockbuster. If Napster were to become "entrenched" (which it won't that quickly) then 100 million free songs and free advertising on countless 20 oz bottles in high schools and colleges across the us will quickly untrench it. In my later years of high school we had to watch a show every morning called "channel one" news. Its like a hip daily news program that is now in more schools then not. guess who sponsors it and even bought the tvs for all the schools to show it? Pepsi. Who passed out "free" bookcovers to all the students? Pepsi. What vending machines and advertisements were in the cafeteria and gymnasium? Fill in the blank _____.

[jayscheuerle]

Originally posted by Nutzoids
Correct me if I'm worng but isn't Apple giving away songs...FOR FREE? 100 Million Free and legal downloads with Pepsi...If you ask me I would rather drink a 20oz Pepsi and enjoy some free music...just me...it's like a pre pay card that comes with a free Pepsi...WOW!

Yeah, but you get that ecological guilt trip about dumping that nasty stuff into the sewer system and needing to recycle the plastic just to get a chance to win something worth a dollar. And how much do you have to spend on one of these sucrose conveyors in order to get this chance?

The musical equivalent of a phone card is a great idea. kudos.

[FlamDrag]

What would be a good idea (and maybe you can do this with the Napster cards) is to allow them to be re-filled. So you only need one card and you can head to your local store and re-fill your card.

Furthermore, why not a Vending Machine type of system - similar to phone cards?

[milatchi]

It's a great idea and Apple needs to jump on and start doing this now.
Reasons it will be popular and work:
a. not everyone has a credit card
b. you might not want an entire cd just a few or one song
c. you don't have to buy immediately you can wait or buy at your convenience and that's what it's all about convenience.

[Vlade]

Why so many negative votes for this thread, what a great idea, and I hope apple steals it from napster, so I can get them as birthday presents (i know there is a gift certificate but what if I don't know the users email address or I want to give them to a group of people)

[Sayhey]

Totally off topic, but I think it's funny that Napster (Roxio) has chosen the anniversary of the 1929 Stock Market collapse to launch their business. I hope they aren't superstitious. ;)

[Balin64]

The beauty of gift certificates/pre-paid cards is that you get people's money upfront. You will be surprised how many gift certificates are not redeemed. That is why gift certs are everywhere. It's free money. Also, I think regular Joe consumer is very wired to the idea that gift certificates online AND in physical locations. The key is for Apple to implement these cards and get the word out. Remember taht gift certificate/gift cards (a lá Home Depot) are worthless until they are rung up at the register. Places like Target, WalMart and BestBuy lose nothing but very slim display case if the cards don't sell. And, when they do, even if their profit margin is small, it's revenue they did not have before.

[daRAT]

Check your Itunes, at the music store Apple now has gift certificates :)

Excellent!