“Napster has been high-profile since it ran two ads during this year’s Super Bowl. The subscriber base — business word-fog for who’s buying the music downloads — has blasted from an end-of-year 270,000 subscribers to 410,000 now, a 53% increase — and 56,000 are university students, a coveted customer base among marketers,” W.D. Crotty writes for The Motley Fool.
MacDailyNews Take: Please see this February 07, 2005 article regarding Napster’s ad that placed dead last in Super Bowl Ad Meter rankings. So, Napster added just 84,000 subscribers if you don’t count the 56,000 students that didn’t choose Napster, but had it chosen for them by ignorant colleges and universities. 9 out of 10 of those stupid students also have iPods. How many of these schools are going to renew after they figure out they roped themselves to a service that doesn’t work with their students’ players of choice?
“Napster’s CEO says he believes Napster is the fastest-growing music subscription service. It needs to be, because there’s a lot of competing going on out there. From Apple, the current king of the hit download parade, to that technology for the nerdy, Microsoft, there is no shortage of suits looking to make a centavo off every download,” Crotty writes. “Worthy of consideration, Apple owns exclusive rights to music downloads for its stalwart iPod: None of the other downloading services interfaces with it. Napster’s service does not work with iPods, restricting Napster’s access to a valuable pocket of the market. Furthermore, it’s unlikely that the two will create an alliance anytime soon, given that Apple holds a healthy and continuous revenue stream in downloaded songs.”
Crotty writes, “Wall Street likes today’s news and sent Napster’s stock up 15% this morning. Hey, what’s not to like? Napster has net cash, or total debt minus cash, of $124 million. Isn’t that enough greenbacks to choke back competition? Well, let’s let the analysts have the final say. They see the company losing $1.72 per share for the fiscal year ended in March and then a larger $1.79 loss in 2006. The fundamental question — as costs to downloading decline and competitors emerge — is: Will Napster be able to continue its growth?”
Full article here.
MacDailyNews Take: In our usual subtle way, in case you missed the headline, we’ll let you know what we think: Napster is a joke. If Napster is Apple’s big competitor, Apple’s in a more dominant position than even we can imagine. We’re not discounting all of Apple’s competition in the online music market, just Napster. Thank a Napster investor, if you ever meet one, for paying for Apple’s market research and preparation. Napster’s plowing the field, planting the seeds, and doing all of the weeding and watering, but they won’t be the ones at the harvest, that’ll be Apple reaping the rewards. Think about it: Napster does all the work, pays to educate the public about the possibility of online digital music subscriptions, and if they happen to establish that a subscription model is feasible, Apple will simply launch their own iTunes Music Subscription service. In this case, Apple’s smart to wait and see. Apple’s subscription service would work better than Napster ever could hope to work (because Apple designs both the player and the service) and it’d also work with tens of millions of iPods immediately on launch day. Napster couldn’t compete on a la carte downloads with Apple’s iPod+iTunes Music Store and they won’t be able to compete on subscriptions either, if Apple decides to take that market, too. We did the math: Napster ends up equalling zero and if they didn’t have gullible universities and colleges to hit up, they’d probably already be close to zero today.
Related MacDailyNews articles:
Napster raises fourth-quarter revenue forecast from $16.5 to $17.5 million – April 05, 2005
Mossberg: Apple’s iTunes Music Store vs. Napster To Go – March 18, 2005
Napster CEO Gorog: Steve Jobs ‘must be pretty frightened’ of Napster To Go – March 14, 2005
Apple’s iTunes Music Store downloads pass 300 million songs milestone (with chart) – March 02, 2005
Napster’s math does not add up – February 28, 2005
Napster’s dirty little secret: changing subscription services into downloads is easy – February 18, 2005
Napster feels the heat over flawed copy-protection scheme – February 17, 2005
Apple CEO Steve Jobs warns record industry of Napster To Go’s security gap – February 16, 2005
Users thwart Napster To Go’s copy protection; do the music labels realize the piracy potential? – February 15, 2005
Napster-To-Go’s ‘rental music’ DRM circumvented – February 14, 2005
Napster CEO Gorog: ‘it’s stupid to buy an iPod’ – February 10, 2005
Report: Napster faces uphill fight to gain share, Apple prepared to run iTunes at a loss – February 10, 2005
Napster’s ‘iPodlessness’ doesn’t bode well for its future – February 10, 2005
$10,000 to fill an iPod? Napster’s going to end up with egg on their face – February 04, 2005
Why ‘Napster To Go’ will flop – February 03, 2005
Napster CEO: We’re ‘the biggest brand in digital music, much more exciting than Apple’s iTunes’ – February 03, 2005
Cornell University’s Mac users ‘uniformly unhappy’ with Napster – January 19, 2005
Cornell University wrestles with Napster’s exclusion of Mac and iPod-using students – September 08, 2004
Why are Cornell’s Mac students being forced to pay for useless Napster? – September 07, 2004
Napster schools to Mac-using students: bend over and take it – September 04, 2004