“It was a breakthrough deal that would have put the Napster kitty on millions of Hewlett-Packard computers. 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. Worse, in January HP announced a surprise partnership with Napster rival Apple Computer to feature the iTunes Music store on HP computers and sell Hewlett-Packard branded iPod music players,” Dawn C. Chmielewski reports for The Mercury News.
“Neither HP nor Napster’s parent company, Roxio, would comment on the soured deal, whose details were confirmed by sources familiar with the agreement. But its collapse was one of several setbacks since the reintroduction of Napster, the pioneering song-swapping renegade, as a paid music service,” Chmielewski reports.
“Napster is losing money, and top executives have left the company, including its president, chief financial officer, vice president of programming and head of corporate communications as well a key board member. On Wednesday, Roxio began laying off people at its Napster division. A Roxio spokeswoman said the company was ‘eliminating redundancies in the organization’ but declined to say how many people lost their jobs,” Chmielewski reports. “Alex Luke, the long-time vice president of music programming, who left shortly after the service’s launch to join the rival Apple service.”
“And while Napster can legitimately claim it’s the second most popular online music service, information provided by insiders at two of the major music labels shows it sells only about a quarter the number of downloads from their artists as Apple’s market-leading iTunes store. Napster refused to release download figures… Napster has attracted about 90,000 subscribers in its first two months — ranking it fourth, behind RealNetworks’ Rhapsody service, America Online’s MusicNet and MusicMatch,” Chmielewski reports.
Full article here.
awwww
This doesn’t surprise me. Napster was losing money based on their business model: “subscription”. Not to mention a superior software to compete with: iTunes. And leaving the choice of ugly MP3 player’s up to the consumer….even if HP made a Package deal with an MP3 player and Napster….some of those Windows users might not have been happy with the player in the package deal. iTunes/iPod package was a better deal and a better package and had more viability to succeed in the marketplace. A no brainer.
Imagine a wind whistling through, and tumbleweeds slowly rolling down the street.
That’s Napster, that is!
But at least it’s better than BuyMusic� ho ho ho!
The dropoff of the # of Online Music services is about to begin. Those who dont have deep pockets (Microsoft?) or an alternative source of income (iPod) will realize there is no money to be made in Online music itself. Whne they close their doors maybe we will see actual numbers of how many songs they sold with people testing their services and realizing they suck. Apple just need to get overseas first as well and they will become the 900 pound gorilla.
Maybe Apple will be able to “scoop up” Toast when Roxio hits Bankruptcy Court in a couple of months.
What do they expect when they utilize a name so closely associated with illegal downloading? I would like to see someone buy the Enron name and relaunch cuz the name is so well known
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Ouch for Roxio/Napster.
Here kitty, kitty, kitty.
Losing the HP deal to Apple will end up being Napster’s death knell. I’d be willing to bet that they will have already gone belly up by this time next year. They’ll also be lucky if Napster doesn’t sink the entire company of Roxio. As was mentioned earlier, it would be nice to see Apple scoop up the Toast application in the aftermath though.
Once a redundant company begins “eliminating redundancies in the organization”, then the end near.
If this gets bad enough, maybe Roxio’s stock will fall enough that Apple will swoop in and buy it, purely for the Toast product.
I have to say this, people. Reading through most of your posts the language is exactly the way people used to talk about Apple. Don’t write either Napster or Roxio off until they go under, for all you know they are about to pull their own iMac out of the hat.
Hey, I sorta feel sorry for the guys. Yaknow, people losing jobs, families destroyed, all that.
What I would like to see is those analysts come crawling and admitting what a bunch of clueless idiots they were when they talked about Napster “threatening” or even unseating the iTMS at the top of the pile.
Good point Dave….
I agree, we shouldn’t start writing Napster/Roxio’s epitaph just yet. I imagine they must have done a business plan before embarking on this – and considered ‘worst-case scenarios’.
A couple of things stick out in this piece: the writer claims that Napster’s the ‘second-most popular music download service’… and yet they can only manage 25% of iTMS downloads. “An estimated 12% share of the download market, compared to Apple’s 56%”. What the hell does that say about the others – how deep are their pockets? And second: “… its [the deal’s] collapse was one of several setbacks since the reintroduction of Napster… “. What were the others I wonder? Hmm, losing $15m in the first two months certainly didn’t get it off to an auspicious start…. and major boardroom losses will set alarm bells ringing soon enough on NASDAQ.
I’m pulling for Roxio. Looks like Napster was a bad decision for them, but the company has always been a great Mac supporter through Toast. No comparison to Easy CD Creator. And I’d rather it not come to Apple buying and producing Toast … that program has always had great support for burning non-Apple format disks — how well would Apple continue to support those aspects of Toast if they bought the program?
hey finelinebob,
I agree with you. The chances of an Apple owned toast giving us formatting options doesn’t look good. I probably need to go buy Toast 6 while it is still around.
For my .02 Napster can fall off the face of the earth, no big deal. Roxio and Toast I’m concerned about. Heck, for musicians mastering their own CDs, I sure hope Jam stays around also.
Someone mentioned that Toast was better than the windows CD Creator. Fact is Roxio didn’t program either of these apps. Toast came from German company Astarte, (the same people who wrote what became iDVD and DVD Studio Pro) and Creator came from Corel. To be fair, Roxio has done a great job at keeping Toast updated with great features. I wish it hadn’t droppped the ability to do a direct bit by bit copy of any format CD. That dropped out after Toast 3.5 🙁
You know, I have to give credit to Fiorina for realizing that the Napster deal was bad. It seems she realized that one payment of a quarter million dollars was not enough if HP wanted to capitalize on digital lifestyle. She might come to the conclusion that subscription was a dead end and download market was profitless. The only way HP can be perceived as cool and capitalize on the trend is to introduce a great digital player. Since it’s hard to beat iPod, HP made the deal with Apple. True HP won’t see the result right away, but in the long term HP gains more than $0.25M.
I agree with others. Gorog and Napster can go, Roxio should stay. They deserve some support for the software called Toast. Don’t penalize the underlings for Gorog’s stupidity.
Maybe someone can make a pun video of the napster kitty taking the bite out of the apple and choking to death. Apple would finally have a story as to why theres a piece missing from its logo.
Buy Roxio.. You are Toast
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DaveH, while it’s true, people have been sounding the deathknell for Apple in the past, and the language being used here may be reminiscent of if, the fact is this is different. Roxio’s financials are dismal. Their sales figures are less than their loss figures. Breakeven for them is far, far away. Apple’s figs were NEVER this dismal, and that’s the difference. Roxio has to tap expensive money to keep going. The question is they are on a downward path financially, and how are they going to turn it around? Do they have a killer product/app coming out? Not that anyone knows. Can they grow their music biz fast enough to turn a profit. Even with the growth in the downloadable music biz, a rising tide floats all boats, it still seems like a longshot that they can turn a profit. As they continue to burn thru their money, financing gets more and more expensive and success becomes more and more unlikely. Something needs to happen for them, and it needs to happen fast. No wonder Chris Gorog is badmouthing iTMS as he/she sees this as a zero-sum game, where Apple’s failure is their only viable chance of success.
Actually, Apple’s figure was pretty bad back them. They lost something like $700M after restructuring losses during Amelio’s era. Fortunately, Jobs returned and Apple stop competing on prices alone and started selling great products. While we can’t write Napster’s epitaph yet, we have to acknowledge Gorog is not Steve Jobs. I can’t see a rabbit pulling out of a hat by a guy who thought a brand associated with piracy was good for legal download (obligatory cheap shot: and who thought WMA was great).
BAD KARMA!!
I for one can’t compare Napster, a newbie ‘beleaguered’ company, to APPLE because APPLE built it’s reputation on changing the world and making insanely great stuff.
Napster looked the other way while people used it to steal.
And all these people threw their lot in with Napster hoping they could parlay this voodoo into houses in Malibu.
It’s like calling a new Cambodian Restaurant ‘THE POL POT’.
Some people think that APPLE charging .99 for a single was too much. By pricing music there, APPLE ensured the lack of profitability of their competitors.
Nobody was gonna charge MORE than APPLE (with their expensive reputation), and most thought they could charge less. So APPLE is making enough money to keep ITMS afloat, and making profits from hardware.
I love it.
DV