“The original big dog in digital music has turned into a pussycat. Roxio’s reincarnation of Napster as a subscription music service has produced millions of dollars in losses, shakeups in the executive suites, and now job layoffs, according to the San Jose Mercury News. A spokeswoman said the company was ‘eliminating redundancies in the organization,’ and did not specify the number of jobs cut, the report added,” Frank Barnako reports for CBS.MarketWatch.com.
“Part of the reason for troubles at Napster may simply be that the online music business is tough. Profit margins are slim. Napster appears to be the fourth largest music service with an estimated 90,000 subscribers, the report said. Insiders at two of the major music labels told the News that Napster sells only about 25 percent of the tracks that Apple Computer’s iTunes Music Store does. ‘I think it’s a very competitive market with very ugly economics,’ commented Steven B. Frankel, managing director of Adams, Harkness and Hill, a Boston investment bank,” Barnako reports.
Full article here.
how are the others doing/losing?
I haven’t tried the alternatives to iTunes Music Store, so I don’t know how the subscriptions work. Pay per month? What’s the cost after that? Anyone actually tried any of these guys?
Worse. Napster is number two in downloads and number four in subscription sales. Every other service is doing worse numbers than Napster. iTunes has clearly won, as has the iPod. Let the bloodletting begin!!!
Just wanted to say, I got my iPod Mini today!! Yahoo! Ordered it a week after they were announced.
Here kitty,kitty…….
My wifes late Valentines present – a lime green mini – is on the FedEx truck right now. She has no idea. My daughter told her she was getting Johnny Depp.
The iTunes Music Store along with iTunes software is just so vastly superior to the others. Even without the store, the iTunes Jukebox is an awesome piece of software on both Windows and Mac. Besides the burning, the sharing is really cool. The Store is just heads and shoulders better than anyone else.
This is where the analysts start talking up the next iTMS-Killer based on WMA isn’t it?
Napster is just so awful, the only thing worse than it’s standard interface is trying to get the Windows Media Player 9 plug in to work, and their DRM eats huge amounts of CPU cycles during playback, poorly executed all the way around. Now iTunes on the other hand is elegant and easy to use, nothing even comes close.
“Ugly economics?”
The bed was on fire when they decided to lay on it.
“The bed was on fire when they decided to lay on it” I dont think the online music market could be better described. Thats great. bob670, I would believe you about the windows media player DRM, but where did you read about that? I would like to read it myself.
It appears they’ve discovered gravity. Another proof of Darwinism at work.
Where art thou BuyMusic.com?
LMAO @ pkradd. Good point. They were almost out of my memory until you mentioned them.
What I’m wondering is just how Penn St. and that other college feels about this news?
When Napster folds, those students will have no more music–but the money they spent won’t be returning. (Although some students will still have something to show for it if they paid the EXTRA cost to burn CDs or use portable players.)
loooooooooser………ha ha ha ha ha …….loooooooooooooserrrrrrrrrrr…..
Hmmm…
The iPod is #1
iTunes Music Store is #1
There are more than 75 Apple retail stores (and more opening all the time)
OSX is the single best, most stable OS out there
The G5 is arguably the fastest personal computer in the world
Apple is officially 100% debt-free, with billions in the bank
I think it’s time for Apple to pull out some serious cash and start an advertsing carpetbombing campaign for the Macintosh. Now that Apple has it’s reputation back, has a renewed brand, and has earned serious hip-points for the music efforts, there couldn’t be a better time. And no Switch stuff or “image” ads…show us the OS, give us stats, offer discounts…give people a reason to buy a Mac.
Suggestion: an entire “myth-breaking” series. Apple could easily make 10 different ads destroying a different Mac myth in each one, while turning it around and showing how the Mac is superior.
What did Stevie say? Hmm…
I think the other mp3 hw manufactures should start discussions w/Apple to include the DRM scheme that Apple uses… pay Apple some license fees… and make there players compatible with the standard AAC format avec Apple’s DRM scheme… just a thought
And all this red ink is gonna scare away the other half-dozen companies that planned to jump into the music download biz.
When companies like Napster and BuyMusic wash up on the shore like dead fish, the other companies that are the next wave will probably balk. It’s the killer combination of store, jukebox, and player, all developed over YEARS that give Apple it’s dominant position (obviously).
Apple will be the lead dog for a long time. Matching the quality and value of Apples products will be difficult, if not impossible, for most competitors.
Hallelujiah.
dv
You know, one of these days — probably not in a year, maybe not even in three, but it’ll happen — selling music electronically is going to develop a standard way of doing business and Apple’s offerings are going to have legitimate competitors. I just have to wonder, once all this has scaled up and taken over a much larger proportion of music sales, how Apple is going to be positioned.
No idea myself — just wondering. Makes me think about Sony in its pre-Walkman days vs. now. Not that I can make the comparison … I wasn’t into electronics enough back then to know Sony well enough to know how the Walkman changed the company, but still….
finelinebob,
Maybe so, but I am pretty sure by that time Apple moves on to “the next great thing”.
finelinebob sez:
“I just have to wonder, once all this has scaled up and taken over a much larger proportion of music sales, how Apple is going to be positioned”
I think that the next 3 years are going to be like the automobile industry from the Ford Model T (1909) to the 20’s or 30’s. Spurts of growth, new hatches of competitors from time to time followed by shakedowns, with events like recessions killing off the weak.
Music may sound glamorous, but selling singles is like selling cheeseburgers or hammers. the fixed costs become obvious very quickly, and a lot of effort goes into saving a penny here or there that becomes significant when you count volume in the millions.
With luck and vision Apple should be able to become a ‘General Motors’ in the arena of audio electronics and content storage and delivery systems. Big, but not a monopoly. Apple certainly has muscled it’s way into a wonderful position that will be hard, if not impossible to match for a long time.
In certain industries it’s called ‘barrier of entry’. For example, if Apple decided it wanted to make jet engines, the amount of capital (billions of dollars)l and manpower needed to match the 2 or 3 big players is so enormous that it creates a ‘barrier’. What you have to invest just to throw your hat in the ring.
Itunes, ITMS, and the iPod create a formidable triumvirate. And luckily the iPod is so damned good that the other companies are stumbling around trying to match it. Meanwhile the ascendancy of the iPod make it the target for third party products and services that broaden the appeal of the iPod. The same way that the wintel universe was able to bootstrap itself past the Macintosh.
But with the iPod, Apple has roared out of the gate, when all the pieces were in place. And it’s command of the marketplace has the competition stunned. Oddly enough, only a handful of tech writers in the press don’t realize that Apple has won this round hands down. The music industry and consumers know where the value and coolness are.
I realize that the press needs to fill inches, and that the appearance of a ‘horse race’ creates tension and attracts readers. Like it does in writing about politics. But I actually think that some of these writers believe that Apple could be knocked off it’s perch in 6 months, with the right circumstances.
I don’t think that this is possible.
dv
Microsoft won’t be deterred by this news I’m afraid. It seems that Ballmer & Co are willing to sacrifice tons of money on projects, as long as these projects assures them that they have a finger inside the door in every part of the digital world. Look at the Xbox. Microsoft is loosing big cash on those things but still they hang in there. And in this digital music arena, the stakes are even higher. Microsoft will stop at nothing to assure that it is >their< proprietary format that ends up the standard one when it comes to legal audio download. Apple best prepare for war. Hannibal ad portas.
I am the napster.
Steve Jobs just strode in and muttered, “Yoink!” Now I’m sorry I smashed his guitar. And I’m too embarrassed to wear my iPod in public.