New online music service takes on iTunes
Napster Inc. begins selling MP3s Tuesday, a move the online music service hopes will lure iPod users and turn around Napster’s sliding fortunes.The company is the latest to make the switch to the unrestricted file format, which makes it music tracks compatible with virtually any music player or other device. “It’s great that we have finally gotten here,” said Chris Gorog, Napster’s chairman and chief executive. “It is really the beginning of a level playing field, which I think is essential for Napster, but also for the health of the digital music business in general.” Tracks downloaded as part of Napster’s subscription service will continue to have copyright restrictions. For much of the decade, major record labels refused to license their music for downloading as MP3s. But steep annual declines in CD sales and the growing dominance of Apple Inc.’s iPod music players and its iTunes Music Store led the labels to ease that position last year to remain competitive. Amazon.com is the only other retailer offering MP3 downloads from all the major record labels. ITunes began selling MP3 versions of recordings from artists on EMI Group PLC labels last year, but the tracks are more expensive and higher quality than standard copy-protected versions. Napster MP3s will be priced at 99 cents each, while full-album downloads will start at $9.95, the company said. Rob Enderle, principal analyst with the Enderle Group, said he can’t picture many iPod and iTunes users shifting to Napster, since iTunes software is so integrated with Apple music players. The exception may be someone looking for a track that Apple doesn’t offer, he said. Napster might have a better shot competing against Amazon, which isn’t solely focused on selling music downloads. “Napster’s brand and focus on the medium should give it an advantage,” Enderle said. Gorog said Napster plans to differentiate itself from rivals through a modest marketing campaign that emphasizes it has the biggest catalog of music licensed for downloads. Napster boasts a catalog of more than 6 million tracks. Amazon says its catalog exceeds 5 million tracks. Los Angeles-based Napster, which first disclosed its plan to shift to MP3s earlier this year, is also betting that an all-MP3 download store will entice some buyers to sign up for its all-you-can-eat music subscription offerings – the firm’s bread and butter. Napster recently said it had about 760,000 subscribers as of March 31. Napster shares closed at $1.54 Monday after rising a penny, or 0.65 percent. In the past year, the stock has traded between $1.33 and $3.92.
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