Analyst: Yahoo’s music entry threatens Napster and RealNetworks more than Apple

21 years ago

Scott Kessler, director of information-technology research for Standard & Poor’s Equity Research Services, says the online giant’s new music service poses more of a threat to RealNetworks and Napster than Apple in a Q&A session with BusinessWeek.

Q: How does Yahoo’s entry affect the digital music market?
A: The headline everyone is talking about today is that Yahoo is now going to become a formidable competitor to say, Apple, which has its iTunes service and the iPod MP3 service. But the first thing is that there are two segments right now in online music: Pay-per-download, like Apple’s iTunes, and subscription services, like what Yahoo is about to offer. The reality is that they are moving into a different segment in online music than Apple. It’s one that is occupied primarily by two other players, Napster and RealNetworks with its Rhapsody service. Those two are going to be much more seriously affected.

Q: Both Napster and RealNetworks have seen shares fall drastically. Do you think those price drops are justified?
A. Napster is really at risk here. While it’s widely acknowledged that they have a well-known brand in online music, what they do is not substantially dissimilar from what Yahoo is now offering. They have the same kind of compatibilities, and I think they even use the same standard for the file formats. What’s worse, online music is really Napster’s only business.

More in the full article here.