Napster vs. iTunes (Napster Responds)

[MacRumors]

In response to Apple's claim of selling 5 times as many songs as Napster in it's first week of operation, Napster's CEO, Chris Gorog, responded in an TechNewsWorld article.

Gorog expresses doubts over the statistics that Apple cited, and anticipates future growth for Napster:

"We expect as soon as we get the word out to consumers that Napster is back, it will significantly impact our growth," Gorog said in an exclusive interview with TechNewsWorld. "We would also expect to be taking away market share from Apple on a weekly basis."

Beyond an advertising campaign, Napster is also partnering with Penn State to provide their students unlimited access to Napster's catalog of songs through their subscription service. Not all students are happy about this deal, and some feel that the money could be better spent.

Apple claims they currently hold 80% marketshare of all legal music downloads and have some substantial marketing campaigns on the horizon (Pepsi, McDonalds?). Steve Jobs also made claims yesterday that the online music download business is not profitable by itself, and that MusicMatch and Napster have "started money losing businesses".

[Java]

Just bought another song, after hearing this.

[stoid]

He's just sad that none of the new visitors bought anything because, IT'S NOT FREAKIN' NAPSTER!!!

[bennetsaysargh]

napster has been in the news forever. it's known that it is back out. that's complete bs. foe about a week, that's all i was hearing everywhere.
yeesh.

and that's coming from my non-apple side.

[Mudbug]

I'm all up for the competition starting ventures that are essentially a losing effort

long live the simplicity of iTMS.

[AmigoMac]

One thing is a goal and a wish...other one is real hard marketing... apple is pushing really hard, more than before...

[Java]

"[Apple is] obviously comparing on the basis of downloads because they're not in the subscription business,"

Hmm, wasn't the success of the iTunes Music store largely due to the fact that it isn't a subscription service.

[johnnyjibbs]

Originally posted by Java
Hmm, wasn't the success of the iTunes Music store largely due to the fact that it isn't a subscription service.

Yep! I think Apples has got it right and I can't wait for them to bring the store to the UK. The upside is, I can preview CDs before I buy...

At least Apple will always be known for being first... and actually coming up with the concept. I just can't believe how all the companies seem to be against it (e.g. buymusic.com not allow Macs access, no support of AAC - that's just anal)

[ces1965]

He disputes the "five times" figure (1.5 million versus 300,000), but then

(1) confirms Napster sold 300,000 downloads and

(2) says Napster did "36 percent" of "Apple's business."

Well then he knows what "Apple's business is", right? 833,000 multiplied by .36 equals 300,000. So he's saying "Apple's business" is 833,000?

My guess, the 833,000 is the downloads to windows users. That plus the 600,000 apple users were buying just about equals the 1.5 million cited by Apple.

[gwuMACaddict]

"need to get the word out?" good luck with that, napster...

*chuckle, chuckle*

i hate being mean to all these other music services, but its so so so easy.

[ITR 81]

Roxio needs to learn NO one wants to rent music and NO one wants to pay for IT service that they are probably not even going to use.

Next thing we hear is Napster has lose in the fight over Music Stores. Apple buys Roxio for Toaster and redesigns Napster for downloadable movies from iVid*or something like that* that can be played on Macs, Windows, iPods, and be burned to DVD recordable media.

[ITR 81]

Does Apples 1.5 million DL's include audio books downloads or not? If not then number could even be slightly higher.
I wonder how much Apple gets on a audio book sell since they cost alot more then 10 dollars on avg.

[ces1965]

He challenged Apple's 1.5 million number on the basis that it's higher than the total number of single downloads reported by Soundscan (827,000).

But at the same time, Gorog is saying Napster did 300,000 downloads, which was 36 percent of "Apple's business." 300,000 is 36 percent of 833,000 (apple's business according to Gorog), for total downloads of 1,133,000 by gorog's own math.

Obviously the Soundscan data referred to by Gorog do not capture all sales.

[1macker1]

What is the percentage of Windows users of the 1.5. If the number is small, then this figure (1.5 million) means nothing to Napster.

[pkradd]

Ummm. So Napster took away 36% of Apple's business. It didn't take anything away from BuyMusic.com or Rhapsody? Who is this guy kidding? Sour Apples I'd say.

[jettredmont]

Hardly even worth the effort of replying, but let's summarize Napster's arguments:

1) They claim that most users don't know Napster is out. This apparently despite my junk email address being absolutely flooded with Napster spam for the three weeks prior to their relaunch, a headline on every major news service in the week prior to launch, and dire "this is gonna kill iTunes" editorials on about 50% of all tech opinion pages.

2) They claim that they will be taking business away from iTMS. Apparently, giving away their songs for free (with initial account signup) didn't get them enough market share. I suppose when they start paying me to download their songs, I'll give them some of my business.

3) He claims that both Apple and SoundScan are misreporting their numbers. He claims SoundScan says there were just 827,000 downloads in that week, and that Apple's 1.5M claim doesn't fit in. Hmmm ... maybe the simpler explanation is just that Mr Gorog's brain just isn't up to digesting figures and he's grossly misreading the SoundScan report. I strongly suspect that the SoundScan figure is for singles, excluding tracks bought as an album; Apple and Napster both sell albums and count those as multiple song downloads (because, well, they are, really).

4) He claims that by his a'figurin' Apple only had 62% market share that week, not 80%. If he doesn't understand how such numbers are counted to begin with, can we trust the calculations he did on the back of his napkin?

5) He calls "foul" on Apple for not counting his streaming business with "thousands" of users (read: almost as popular as PressPlay et al!) in their comparisons. You know, he's right. On the other hand, Apple forgot to note how many Macs and iPods and QuickTime full version subscriptions they sold in the same period too. No, come to think of it, maybe Apple was right at the beginning: in terms of downloadable purchases of music (meaning, music that doesn't evaporate when you close your subscription to a service), iTMS beat the ever living crap out of Napster.

In any case, the Apple press release effectively silenced the roar of the Napster Apocalypse crowd. Now, back to business, which is, Apple selling tunes and Napster dying its second death.

[hulugu]

Seriously what is this guy supposed to say:

Why yes, we are getting our asses kicked by iTunes because our business model is totally flawed and that supposed niche player is just beating us like a red-headed stepchild. Yes, we're the bastard devil child of what used to be something cool, but now Shawn has been excommunicated and we're just using the name because we couldn't come up with any thing original in the first place. We admit defeat, stockholders and investors here's your money back, we're going to go crawl under a rock now. Sorry, bye.

He's going to claim victory until the company folds beneath him that's his job as a PR flack.

[Superdrive]

My friends still think that Napster is free. They are disappointed when they open it and realize that you have to pay.

The good news is, they LOVE iTunes. They see that it works better on their computers than mine, so it looks even better. Sorry Napster, but the name just won't give you instant market share. You need the good stuff eg: iTunes.

[iLilana]

got news for ya CAT(refering to napster).... We already know and still find you lame.

[Macmaniac]

Have you ever seen the ads for Napster, there are all sorts of references towards drinking and drugs. Poor kitty

[Dahl]

The ads suck.

I wonder if Napster will take the same route as Buymusic ?
( dead... )

[varmit]

All this will do is drive up piracy. People use Napster to listen to a song streaming, then when they want it, go to kazaa. I'm a Penn State student, and that is how it will happen. Until the University can provide a downloading version of these file sharing services, that allows students to download even a fixed number, or hold a fixed number, no one here will pay for it. And tuition next year is going up again, and this is going to add more.

Why doesn't my University get a download service like iTunes, have Apple set up a server on campus, modify the iTunes program, so we can stream music using dynamic sharing, kind of like what napster is right now to us, but add on the feature of haveing the ability to hold 50 downloaded songs on our computers. We can burn them or move them to a mp3 player, then download 50 more, but no more than 50 can be perminately on the pc. (perminately as in when iTunes closes it can only hold 50 from the school server, the digital water marks saying school music copy, different from consumer copy. So that people with 1,000 songs can move them to their computer to shuffle the songs, then move them back to the player. But you can delete song files and download others.) Then take the money that we are paying napster, and pay it to apple. Say $10 a person, or maybe more, and pay that for the year. that would be $830,000 for the 83,000 students here at penn state. Get more schools like this, and the music business is back in business. We can stream the music in the labs and everything, getting as much bang for the buck.

And I don't want to be a ****ing market gimick, which we are, and napster is going to try and milk this for all its got.

[Java]

Originally posted by hulugu
Seriously what is this guy supposed to say:

Why yes, we are getting our asses kicked by iTunes because our business model is totally flawed and that supposed niche player is just beating us like a red-headed stepchild. Yes, we're the bastard devil child of what used to be something cool, but now Shawn has been excommunicated and we're just using the name because we couldn't come up with any thing original in the first place. We admit defeat, stockholders and investors here's your money back, we're going to go crawl under a rock now. Sorry, bye.

He's going to claim victory until the company folds beneath him that's his job as a PR flack.

Let's bring back Gil. He can save this company.

[Mr.Hey]

What I love about Apple is that it currently holds 2.?% of the computing market (installer user base is much greater) but has influence as if it had ten times that amount. Go Apple!, GO GO GO!!!.

[sgtlmj]

I'm a Windoze user getting ready to switch as soon as I get enough $$$ for a 12" PB, but in the meantime, I'm using iTunes with M$ and my iPod couldn't be happier. (Well... it will be happier when its mated to a PB!)

Anyway, I'm watching all these music services starting up with glee. Apple, Buy.com, Napster, MusicMatch, Wally-World wants in now...

You know what I see? Competition! $0.99 per song is a great price, but perhaps when all these folks get up and running, Steve may lower the price of the songs a bit, or offer a buy 10 get one free thing.

Competition is good. It keeps everyone sharp, and keeps the prices resonable. It's also an inspiration for innovation. We'll be seeing new compression formats, players, streaming services all within the next few years, and it's everyone's love of music, and the desire to get anything instantly that is driving this.

We can be amused at the ploys of other wannabe services, but its all good in the longrun.

Just my $0.02