Napster CEO Gorog blames Microsoft for failure to compete with Apple’s iTunes Music Store

“Technical glitches by Microsoft and the digital music device makers have hampered Napster Inc.’s ability to close the gap with Apple’s iTunes, the dominant online music service, Napster’s chief executive said on Tuesday,” Adam Pasick reports for Reuters. “‘There is no question that their execution has been less than brilliant over the last 12 months,’ Napster Chairman and Chief Executive Chris Gorog said at the Reuters Global Technology, Media and Telecoms Summit in New York. ‘Our business does rely on Microsoft’s digital rights management software and our business model also relies on Microsoft’s ecosystem of device manufacturers,’ he added.

“‘It’s a lot more complex to get organized properly than it is to build one device and one service as Apple has done,’ Gorog said. ‘It’s always been painful at the introduction of new technologies. But it always takes shape like it’s done in the past.’ Gorog, whose company has one of the best known names in the business but has failed to put a dent in Apple Computer Inc.’s 80 percent market share, argued that eventually the ‘Microsoft ecosystem’ and its Windows Media format will prevail, with new devices on the way from firms like Samsung and Sony. ‘Ultimately, the consumer electronics giants … are all going to come to this Windows Media party,’ he said. ‘This is really going to be the ubiquitous format,'” Pasick reports.

“Napster, which shares a brand but little else with the free service that originally shook up the music industry in the late 1990s, has struggled to make its case with investors and consumers, Gorog acknowledged,” Pasick reports. “‘We have not been as successful as we might in articulating the real value of this business,’ he said. Napster’s market capitalization is about $160 million, but it has cash assets of about $112 million, leaving it with a relatively small enterprise value. The company’s third-quarter net loss widened to $17 million for the three months to December 31, from a loss of $12.8 million a year earlier… Gorog insisted that despite Apple’s dominance, the competitive landscape would be far different ‘in the next 12 to 24 months.'”

Full article here.

MacDailyNews Take: Microsoft as the source of “technical glitches and less than brilliant execution” shouldn’t surprise anyone. That’s like saying Häagen-Dazs will produce ice cream. Some things in this world are utterly self-evident and totally predictable. And hasn’t Microsoft been throwing a “Windows Media party” for years now? The problem for Napster and many others is that nobody came. That so-called party was over before it began. As usual, success is always “12 to 24 months away,” with “with new devices on the way.” Nice moving targets and pie-in-the-sky dreams. Napster shareholders must be proud as they plummet toward the pavement. Gorog is correct about one thing: in 12 to 24 months the competitive landscape will be far different for his company — it’ll be buried six feet below it, DirtNapster™ style.

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  1. What? Napster not dead yet?

    As you know PC folks, it’s a relatively easy matter to keep subscription music in a permanent fashion.

    Yahoo! subscription music is even cheaper than Napsters at only $5 a month.

    Now of course, how can you keep subscription music permanently?

    Follow the yellow brick road of course!

    Google for “Marv on Record” ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    Of course if you have a heart and feel the artists should be rewarded for their work, a mere 99¢ a song at iTunes is the way to go!

  2. Gorog’s sounding a little desperate… Pointing fingers at everyone else but himself. Must be feeling a little stressed and left out, what with MS paying attention to MTV and settling with Real, and even HP doing deals with Real (Realplayer and by extension, it’s Rhapsody store).

    Not sure I’d want to be doing business with Gorog; maybe that’s why even MS has turned it’s focus to others.

  3. WMA is not a very good format and I will bet that people buying devices other than iPod are mostly downloading mp3s for free. Why does Napster use WMA and not an ISO standard format like AAC? You can bet that there is a pile of Microsoft money involved. Gorog doesn’t seem to be too concerned about the millions and millions of dollars his company is losing and looks like he is willing to keep losong it for another 2 years. No one is that stupid unless there is an unlimited amount of funding coming from somewhere. Bill will sooner or later become impatient with this blabber mouth nit and give em the flick.

  4. Hey Chris Gorog!!!

    Need some cheese to go with that whine?

    We smart investors knew your company was a sham, buisness wise the numbers didn’t make sense.

    Enjoy your new home and cars on the backs of the less savy investors.

  5. Maybe he should ditch Mafiasoft and go back to Napster v1.0, i.e. without any DRM and a free for all®. Bet that would work.

    ” width=”19″ height=”19″ alt=”tongue rolleye” style=”border:0;” />

  6. “whose company has one of the best known names in the business”

    Yes, Adolf Hitler also has a well known name. Napster is best known for stealing music, that’s it!
    Oh, and for failing to beat Apple by making “one device” and letting Microsoft do the rest.

  7. Napster is stuck with Microsoft’s WMA-DRM. Beside Apple’s DRM which they cannot license, there is no other one around which is supported by other mp3-players.

    Maybe their suscription service is not exactly what most consumers want anyway.


  8. The plain fact is that the vast bulk of sensible people won’t rust their permanent music collection to a company with dodgy financing, poor performance and who can charge whatever they like in the future.

    What do you say except aaaarrrgh when in 5 years of investment the thing turns off. Where does that leave you?

    All very well for Napster to blame Microsoft, I do too, but their model just won’t stack up over time.

    MW+ problem…yep, Napster ha a problem. A big problem.

  9. They are in the 20% market share and yet they complain. Such a bunch of negative people!!!

    Mac OS only have about 5% share of the market, and they are positive and aggressive.

    Dudes out there, learn from Apple.

    But one thing for sure, resistance is futile…..

    WORDs OF ADVICE: Virgin, Dell, Sony, & some others already surrender the war. So Creative, ScanDisk & Napster. Don’t let the dark shadow overclouded you. Leave the dark side, and join us. “Gorong, I’m your father….”

  10. Of course what all these windows guys don’t realize is that this industry is identical to the PC industry 20 years ago. The key is “Complimentary products”.

    Now 20 years ago the compliments to a computer were software (for iPod read Music) and hardware (e.g. printers, scanners etc.)

    Windows had the most software and more compatible hardware so it won.

    Lets look at the iPod:

    Software (Music etc.): well both iPod and competitors are identical, but ITMS is better than the others and more integrated. Also Apple now has videos on the store which others do not … so iPod wins

    Hardware: Well here iPod wins hands down … I think that it must be at least 10 – 1 vs. the competitors … so if you buy a Sony or Samsung product you cannot get all the same funky add ons that you can with the iPod … so which do people buy? the iPod obviously


    End of story … why do people think that consumers will gravitate back to Windows Plays for sure? The only reason might be if Apple fscks up the ITMS and raises prices … but then again that doesn’t seem likely in the short term. (I still buy CDs anyway to have a full quality master copy)


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