HP, Napster and iTunes

MacRumors · Feb 19, 2004

Despite Napster's popularity at select colleges, it appears that the relauched Napster service is having some difficulties.

This Mercury News article reports that besides losing money, several executives have left and a round of layoffs began on Wednesday.

According to record label sources, Napster only sells approximately 1/4 of the songs that iTunes does.

Of additional interest is that the surprise Apple-HP deal announced in January was originally Napster's partnership:

But in the days leading up to Napster's re-launch in late October, HP suddenly -- and without explanation -- returned Napster's $250,000 check and canceled the agreement to install a link to Napster's online music service on its computers.

Napster's chief executive Chris Gorog, however, remains upbeat about the company's prospects and points to retail partnerships, pre-paid cards, and their European launch.

gwuMACaddict · Feb 19, 2004

big surprise....

jholzner · Feb 19, 2004

I'm betting that it was the iPod that broke HP's deal with Napster. HP wanted to sell the iPod...or HPod and a deal with Napster would have buried that idea. Way to go Apple! Wonder which iTMS competitor will be the first to go under. Hope apple beats Napster to Europe.

iGav · Feb 19, 2004

Napster... kind of doesn't really have the same kudos now that it's legit does it...

sinisterdesign · Feb 19, 2004

it's not very often or for very long that we can say we OWN a market, so i have to admit i'm enjoying seeing Napster suffer (happy to admit there are quite a few oldskool Napster songs on my iPod).

and i was pretty shocked by the HP/Apple deal, but evidently not as shocked as Napster!!!

dukemeiser · Feb 19, 2004

I wonder how long it will be before they switch to AAC to stay alive?

hobbes3113 · Feb 19, 2004

Did anyone actually think that Napster would survive? How long until it goes completely under...

Rincewind42 · Feb 19, 2004

Originally posted by dukemeiser
I wonder how long it will be before they switch to AAC to stay alive?

Well, unless Fairplay is licensed to them it won't really matter if they do. And while I like that Apple is currently owning the legal market, in the long term I think they will need to allow others to sell Fairplay encoded AAC, and even further out to license other players to play it. Basically kill 1 or 2 of the major WMA services (Napster & some one else) and then allow themselves to make money on others who want to sell & play their DRM flavor.

Photorun · Feb 19, 2004

<Nelson> Hahh Hahhhh! </Nelson>

Rincewind42 · Feb 19, 2004

Originally posted by hobbes3113
Did anyone actually think that Napster would survive? How long until it goes completely under...

I seriously doubt they will live to see their first anniversary - unless someone really wants to lose a bunch of cash on them

widesky · Feb 19, 2004

Cue the move to Microsoft-owned subsiduary

srobert · Feb 19, 2004

Is'nt that Chriss Gorog guy the same guy who last month was saying in conferences things like:

"Apple got it all wrong with it's iTMS model"

"Don't join the Apple bandwagon"

jxyama · Feb 19, 2004

some of the quotes in the article are hilarious.

``I think it's a very competitive market with very ugly economics and there's just no money in the download business''

nope, there's no money in the downloads and jobs made it abundantly clear that iTMS exists to sell iPods.

Gorog said he resists comparisons with other subscription services because of incongruities in the way subscriber numbers are reported. But he expects the business will mature as users realize it's cheaper to pay a flat fee for access to 500,000 tracks than to pay $1 a song.

that's $10/mo to access 500,000 songs or $1 a song to keep. has this guy learned anything from the success of iTMS and failures of other subscription services?

johnnyjibbs · Feb 19, 2004

I always thought that Napster 2.0 was not coming to Europe (as in no plans). I guess they'll have to now, especially when iTunes may not arrive here until the end of the year...

Well, I hate seeing the downfall of a 'rival' being a good thing, but this does bode well for Apple.

johnnowak · Feb 19, 2004

BOOM!

crawdad62 · Feb 19, 2004

Originally posted by widesky
Cue the move to Microsoft-owned subsiduary

Now that's an interesting possibility. Actually I'm surprised it did happen from the get-go. I guess MS is/was betting on its very own service but it seemed like a decent marriage.

Lancetx · Feb 19, 2004

Napster is having the same problems with breaking into the European market that Apple is, so you won't be seeing Napster in Europe any sooner than Apple gets there. At the rate things are going, Napster won't even survive long enough to get things started in Europe in the first place. I'll bet that one year from today they aren't even in business any more and they may just drag Roxio as a whole down with them.

nuckinfutz · Feb 19, 2004

Let'em wither

And then Apple can swoop in ravage their caracass for anything worthwile. Perhaps Apple can turn Napster into a underground unsigned artist label instead.

srobert · Feb 19, 2004

Originally posted by Lancetx
I'll bet that one year from today they aren't even in business any more and they may just drag Roxio as a whole down with them.

Too bad. I like Roxio Toast Titanium.

But Gorog should make up his mind. He says that monthly fee is the way to go but he sells stuff like this, that can only be used in a per song model... thinking of it, the napster player is useless if you use the "good" monthly fee model. Or am I mising something?:

MarcL · Feb 19, 2004

The author of the Mercury article writes about how Napster is getting a push from pre-paid cards at Target, but fails to note that Target is also selling iTunes pre-paid cards and iPods.

Lancetx · Feb 19, 2004

Originally posted by srobert
Too bad. I like Roxio Toast Titanium.

Me too. So let's hope that Apple can acquire the rights to the software in the aftermath.

billyboy · Feb 19, 2004

Sounds like Napster have money from a couple of sources and had too many cooks spoiling the broth. Seems that iTunes business plan really is going places.

jholzner · Feb 19, 2004

Originally posted by MarcL
The author of the Mercury article writes about how Napster is getting a push from pre-paid cards at Target, but fails to note that Target is also selling iTunes pre-paid cards and iPods.

Well, I stoped by my local target store last night. They had napster cards for sale but none for itms and NO ipods anywhere...and they haven't for months. I don't know what is going on.

CMYanko · Feb 19, 2004

The Napster layoffs showed up on F*ckedCompany yesterday.

Lightningwolf · Feb 19, 2004

Cheers to the imminent death of a WMA service. Does anyone actually use WMA encoded music files? I know all of my music is AAC and MP3's...

HP, Napster and iTunes

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