“Once again, Apple’s iPod is expected to be the hottest gift of the holiday season. That should be great news for the recording industry, right? After all, many of the 10 million or so new iPod owners surely will rush to Apple Computer Inc.’s iTunes Music Store to load up on songs,” BusinessWeek reports. “Apple, which launched the digital music revolution, may now be holding it back. Critics say Apple’s proprietary technology and its refusal to offer more ways to buy or to stray from its rigid 99 cents a song model is dampening legal sales of digital tunes. ‘The villain in the story is the iPod,’ says Chris Gorog, CEO of Napster Inc., which sells both subscriptions and downloads. ‘You have this device consumers love, but they’re being restricted from buying anything other than downloads from Apple. People are bored with that.'”
BusinessWeek reports, “Apple will continue to take flak. That’s because an army of companies has rolled out new ways to provide music — from legal peer-to-peer sites to established players such as Real Networks Inc. and Napster that offer all-you-can-play subscriptions for a monthly fee. The thing is, very few work with the iPod. “I have half a million subscribers who would love to use an iPod with my service,” says Napster’s Gorog… Still, subscriptions are a tough sell to mainstream customers. ‘The concept of a jukebox in the sky is not something most consumers intuitively get,’ says Dan Sheeran, a senior vice-president at Real. If Apple came in, it could change the game.”
Businessweek reports, “Then there’s pricing. Three music companies have publicly pressured Apple to loosen up its 99 cents approach. Jobs is convinced that having a simple, acceptable price is crucial to lure music fans away from free file-sharing sites. ‘It might make sense to raise prices in the future,’ says a source close to Apple. ‘But now is not that time.’ …So will Jobs change his tune? Not unless he has to. Apple can barely keep up with demand for iPods, which reap as much as 25% gross margins, vs. minimal profits for each iTunes track. So right now there’s no reason for the company to alter the way it sells music or make its player compatible with other services. But if download sales don’t bounce back, music companies could start looking beyond Cupertino for answers.”
Full article here.
As is its CEO, Napster is a joke. According to Gorog, people who buy iPods are “stupid.” So, now he wants “stupid” iPod owners to use Napster? Calling customers that you desperately want “stupid” is an interesting marketing strategy for an outfit that’s hemorrhaging cash. If Gorog really want to save Napster, he should forget about the music service and turn his focus towards making Napster-branded iPod accessories instead.
We have to wonder if Gorog has done the math. Sour grapes from a struggling outfit that’s getting steamrolled by Apple change nothing. Apple isn’t holding back the music business, they’re revolutionizing it. People aren’t “bored” with iTunes, obviously. Napster just wants you to think that, of course. When Napster makes it’s weak service with half the music library of iTunes available to both Mac and Windows users, like Apple’s inclusive, cross-platform iTunes Music Store, then maybe Gorog can shoot his mouth off a bit. Until then, he should just continue to silently helm Napster’s march into oblivion. Gorog’s incessant whining is unseemly.
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Related articles: Do the math: Napster posts $13.6 million second-quarter loss – November 02, 2005
Napster President: Apple CEO Steve Jobs has ‘tricked people into buying a hardware trap’ – August 22, 2005
Apple’s roadkill whine in unison: ‘incompatibility is slowing growth of digital music’ – August 12, 2005
Napster: the only thing missing is the sock puppet – August 04, 2005
Napster, other Windows Media-based music services ‘chasing a niche opportunity’ – June 29, 2005
SmartMoney: Napster is a snooze, gushing money and renting music is un-American anyway – July 06, 2005
Napster To Go Soon? Reports $24.3 million net loss on $17.4 million net revenue – May 11, 2005
Napster is a joke – April 05, 2005
Napster CEO Gorog: Steve Jobs ‘must be pretty frightened’ of Napster To Go – March 14, 2005
Napster’s math does not add up – February 28, 2005
Users thwart Napster To Go’s copy protection; do the music labels realize the piracy potential? – February 15, 2005
Napster CEO Gorog: ‘it’s stupid to buy an iPod’ – 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
The de facto standard for legal digital online music files: Apple’s protected MPEG-4 Audio (.m4p) – December 15, 2004
Napster CEO: ‘it would be great’ if Apple iPod supported WMA – March 09, 2004
Napster CEO: Apple iTunes, iPod ‘consumer-unfriendly experiences’ – March 09, 2004
Napster 2.0 posts US$15 million relaunch loss – February 08, 2004
Apple is a profit-driven company! They want the industry to be healthy, of course, but their chief concern is the health of Apple. There are many ways to experience music out there, and Jobs and co. doesn’t prevent you from listening any way you want, but remember that iPod belongs to Apple, and they are not obligated to open it up to anyone in any way.
To say that iPod and iTunes has held back the industry is silly. If someone else wants to take the lead, there’s nothing standing in their way but risk and innovation…
already own CDs and use THOSE with iPods. Locked into iTMS? Hardly.
Next most popular choice: people buy new CDs.
Then there’s used CDs.
Then there’s free MP3 services.
Then you have recording from vinyl and from Internet Radio.
Last you have buying from any online place you want, and burning a CD you can convert to iPod.
You have ALL those options with iPod.
What are you missing? Music rental. Pay forever and lose it all. That’s the only option you don’t get with iPod.
What options to you lose with Napster, Real, and Micro$oft? You lose the option to use a Mac. You MUST use Windows.
So who’s the villain? Micro$oft and their thousand “partners,” or Apple?
To “Oh Please”: There is absolutely nothing stopping anyone from making an MP3 player as you can plainly tell by the dozens of brands at any Best Buy or Circuit City. The “problem” is that not one company has come up with a better combination than iPod + iTunes. Is that Apple’s fault? Should Apple turn around and completely redo the iPod and make it a crappy knock-off and make it less appealing so all the other companies have a chance to compete? That would be completely rediculous. Apple makes awesome products, and people love the iPod because its the best product on the market. Why shouldn’t they also tie it in with iTunes, the best music store? The problem with Chris Gorog and all of those other companies is they are quick to point the finger at everyone but themselves. Apple deserves to be at the top because they did the work and made a complete solution. Just because the other companies choose to half-a** their offerings doesn’t mean Apple should prop them up by opening Fairplay. Apple will be on top until someone else makes a better combo than iPod + iTunes…until then, no one can touch Apple, and they deserve the following they have.
To all the boredom with iTunes is with an exciting price increase!
While I do agree that the exclusion of iPod owners from subscription services (not my thing, but I can see the appeal for some) is a negative and may be hurting the rise of THAT TYPE of music distribution, I don’t at all buy the argument that the 99 cent pricing model is hurting download sales. The 0.44% decrease was total legal music downloads – what is the data for iTMS only? Without that, it’s difficult to say that iTMS is in a “lull”. Regarding the alternative pricing structures, no thanks. Seriously, who really believes that the median price of songs is going to drop if they offer older music for less and newer tracks for more? If anyone believes this is anything other than a mechanism to increase the profit margin, you really need to take a rest, guy.
I would rant about the Gorog quote “You have this device consumers love, but they’re being restricted from buying anything other than downloads from Apple”, but Dogfriend already summed it up.
Also one last point to consider: you can play tracks from any store without a portable player. Despite the fact that I am shackled to my iPod, I can still fork over a monthly fee to Napster for a subscription service and listen to the songs on my computer. In fact, I spend more time listening to music that way than with my iPod. Gorog you, buddy!
“The thing is “oh please”, is that I would rather wait for Apple to do it right, than to wade through all the junk that the other “innovators” are putting out”
It’s easy to wait when you don’t have a choice. By keeping their system closed, they’re stifling innovation by making it virtually impossible for small companies or programmers to create a marketable, innovative product.
.
.
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And John, no, “all this crap” is not like your car analogy.
A real villian is someone who doesn’t mind his own business and worries about some else, like what religion I should believe in or what music player I should buy and which music store I should download from.
Start your own music service and have them burn to a CD and import into iTunes. Simple
Oh please-
99 % of people who have iPods don’t have no problems importing music from other sources in their iPod and people who don’t have iPods don’t complain about importing music into their music player.
It’s people like you who can’t stand Apple Success and whine.
Gorog…. great new name for a Klingon villian!!!
TrevX,
You quite don’t get it.
“The “problem” is that not one company has come up with a better combination than iPod + iTunes.”
Yes, that’s true, but because of Apple’s licensing stance, only a large company would have the funds to create a music player and the software and and a music distribution model. So you could have a great idea for a music player, but there would be absolutely no incentive because you wouldn’t be able to sync with iTunes or use the iTMS. Likewise with a software program; what would be the point if the majority of mp3 player owners couldn’t use it? Apple is stifling innovation because the little guys don’t have the resources to compete, and thus, what could have been a superior product within the Apple system, would never be created because Apple won’t let it in. This doesn’t hurt Apple, but those of us that are consumers are the ones hurt.
I HATE MICROSOFT BECAUSE I CAN”T PLAY SONY PLAYSTATION GAMES ON XBOX. WHINE WHINE WHINE
RE: Oh please. –
– “you guys don’t actually believe that because Apple jump started this market they are the only ones that can help it move forward?”
I certainly don’t believe that, no. But I also don’t see any other companies with the overall hardware/software integration necessary to move things “forward” either. Apple is therefore uniquely (and deservedly) positioned to direct future developments in this field.
– “APPLE IS HOLDING BACK THE INDUSTRY.”
Thanks for the CAPS. Hate to break it to you, but Apple IS the industry – and, again, deservedly so.
– “for the simple reason that they control everything and limit innovations.”
Oh, please… The company widely recognised as being most innovative is stifling innovation…
– “There are several other companies out there that could be working on ways of improving DRM or iTunes, or even the next MP3 players.”
Let them do so; if their products are better than Apple’s they should earn their place in the market
– “but because Apple is not licensing the technology, companies are limited to iPod accessories. (how fancy is that?)”
Hang on; you’re saying these other “innovative” companies require Apple’s knowledge and technology in order to make their own succeed…??
– “and at that, they are requiring that the companies pay a tax to carry “Made for iPod” tags to their products. Is that a way to treat your partners that will in the long run strenghten your products? i don’t buy it.”
Do some background reading on this and you’ll discover what prompted Apple to take this action and how it helps them protect their product and brand.
– “Personally, i believe we would have had DVR, and Movie downloads already had Apple open up their interface. Instead we are having to wait a couple more years untill Apple introduce their own products. 2 years. that is 2 years i am having to wait since i just got my original iPod. WTF…”
Well, 2 years ago Apple had nowhere near the market position (and, hence, leverage) they have now – so where’s the logic in what you’re saying? If some company could realistically have got movie downloads off the ground then they would have done…
– “anyway, i am not buying this kool aid that you guys are selling. All Apple products are not the best. and they should not be the only ones. Open market encourages innovations. Not MONOPOLIES.”
– THANKS AGAIN FOR THE CAPS. Buy the Kool Aid, don’t buy the Kool Aid. Having such choice is the beauty of the open market you praise. And in that open market, people have chosen Apple. If you don’t like their solutions, you and other like minded individuals should seek alternatives elsewhere. If there’s enough of you, you will eventually have an impact on the market, thus encouraging Apple to change their practices and prompting other companies to cater your needs.
– “And No I am not a fan of Napster, Dell DJ, or M$. or a troll.”
Good.
– “And i do love Apple products. i just hate that they think they are the alpha, and omega of everything. Please..”
I love Apple products, too – but don’t confuse or try to pass off your subjective perception as objective fact. Apple has (to my knowledge) never stated that they think they are the “alpha and omega of everything.” Or even that they are “the shizzle”… They’re just doing good stuff which the rest of the world is finally catching on to.
Apple came out with a Music Player and the iTunes store to download music to their product. Thats it. Buy it or buy something else.
“Apple came out with a Music Player and the iTunes store to download music to their product. Thats it. Buy it or buy something else.”
Um, that’s exactly the problem. As an aside, I find it quite ironic that the Apple motto is to “Think Different,” which apparently applies only to the company and not to its consumers.
The slowdown in iTMS music sales can be correlated with the increase in podcasts (free) and now video on the iTMS. Granted, video only works on the latest iPod, but podcasts work across the board.
Also, I find CDs are decreasing in price, regularly selling for 9.99 to 12.99. I’m not sure if there has been an increase in CD purchases in the last 6 months, but that could be it too.
Simply put, now that there are other things to listen to (or watch), music is falling behind. Maybe if the labels agreed to lower prices across the board, music would become a bit more compelling.
Napster … when did they suddenly become all high and mighty?
The problem I see it is that the music industry (and now the film industry) are intent on making us pay for every transfer to a different medium…. eg. vinyl to cassette to CD and now to AAC/MP3/WMA (for film it’s cinema to video or dvd)
You theoretically only rent the stuff anyway, if you keep up with the format changes, but now these Napster people want to rent even more stuff…. Do American’s actually own anything??? They already rent their cars (lease, same thing), houses, cable tv, radio, … and so on. Even Microsoft is considering a rental software model. On that theory alone, Napster should be doing really well.
Are American businesses Hindu or something? It’s just that they worship a rental model which is evidently a huge cash cow…
My name is Chris Gorog and I run Napster.
We have a subscription service but I can’t get enough people to subscribe since it’s kind of difficult for me, my staff and my marketers to explain.
But if Apple offers a subscription service, they can do it better, and Steve can explain it better. Then people will want to use a subscription service.
Maybe they will use mine if they use the Windows OS, but if they don’t and use Apple’s instead, it would put me out of my misery.
Thank you.
Realist
I don’t see any problem or confusion in this. Music can be download from iTunes and imported to an iPod or Music can be imported through another source into the iPod or if you own another music player, the same applies to importing music from another source like MSN, CD’setc. Apple has as much right to open up a music store with downloads for their product. Any manufacturer has a right to have propietary parts in their products and since music is not a part, it can be obtained legially from other sources. So what is the problem.
RE: Oh please,
I completely understand. Open up the technology to the world so there will be improvements and things will be better for all, like Microsoft did with Windows. You know the way you can buy so many diverse Win PC’s, with so much technological innovations. Things are so great with open standards. That’s why Open office is just so great, so innovative so unlike anything else. It never crashs, it never fails, the hardware is just so cool.
Open standards may have great potential as does pure socialism. Perhaps when people change human nature your ideas will have merit. Unfortunately I think there’s a long, long wait for that.
I have 3 thousand songs on my iPod and none of them were bought from iTMS.
@iJavaJoe
We are taking about a music player and songs, not communicating, linking up with a Klingon ship and downloading data from it.
Gorog is in Startrek. He is from the “Cling-on” Empire!!!
Yes…Apple has a monopoly; a vertical one however unlike Microsoft’s whose is horizontal.
The biggest issue for “the others” is that they want to get into the universe that Apple created. No, they didn’t create the industry. However, the created a solution that the general public could grasp.
Secondly, Apple only controls part of the equation; they do not create music. Apple just controls the movement of that music to a playing device.
Third, any other player that is out there can use songs downloaded from iTunes…just burn them to a CD first! Unfortunately, I haven’t seen transfer and cataloging solutions as problem free as iTunes.
Fourth, the real problem is actually with iTunes, not the iPod. iTunes “locks” out the competitors and only allows synching with the iPod. Let’s get our facts straight.
Fourth, the real problem is actually with iTunes, not the iPod. iTunes “locks” out the competitors and only allows synching with the iPod. Let’s get our facts straight.
Why do you have the desire to only purchase from the iTMS.?
You can import music into the iPod from any other source by importing into iTunes and nobody is forcing you to use the iPOD or iTMS.
“So what is the problem”
One problem is that it stifles innovation.
Secondly, it’s not good for the consumer. It may not hurt right now, but it will in the future. It is far better to have universal standards for things like music. Imagine if every music label or movie studio distributed their product with unique DRM-like protection that requires a different device to play it.
Do you live in the US? Remember when you couldn’t change cell phone networks without having to change your phone number? It was decided that ultimately the consumer would benefit. Yes, it may have hurt some networks who saw their customers leave once they weren’t tied into one specific network, but that just encouraged innovation and competition with the best providers winning? If you are so confident in Apple’s ability to innovate, then you surely are not threatened by having an open standard that would allow other potential innovators to have a chance.
‘The villain in the story is the iPod,’ says Chris Gorog, CEO of Napster Inc., which sells both subscriptions and downloads. ‘You have this device consumers love, but they’re being restricted from buying anything other than downloads from Apple. People are bored with that.'”
iPod is the hereo. Restricted?, Bored? How about neither Gorog. It’s the best online store bar none and it works for both Mac and PC users not like yours which is Windows only crap. Your the one that is restricted and people are bored with. That’s why iTunes and the ipod are kicking Napsters butt.