Napster’s a British beachhead

Company's entry sparks fee battle with foes

This article was updated at 4:06 p.m.

LONDON — Online musicstore Napster launched in the U.K. on Thursday and immediately drew derision from Web-based rivals who say it is too expensive.

Once the nemesis of the record industry, the new legitimate Napster is a solid but distant second to Apple’s iTunes in the U.S. market. Like its American version, Napster in the U.K. carries music from all five majors and many independent labels.

Napster intends to charge U.K. consumers £9.95 ($17.63) for a monthly subscription that allows unlimited streaming.

Users can also download tracks for $1.94 or albums for $17.67, a price hike compared to the U.S., where Napster charges 99¢ per song and $9.99 per album.

Noting the U.K. is the biggest market in Europe, Napster U.K. general manager Leanne Sharman said: “By carefully tailoring the service to the local market we have an unparalleled proposition for U.K. music fans.”

Targeted trim

First international launch gives Napster a first mover advantage over iTunes, which has yet to debut in Europe but has said it will do so later this year.

Existing European musicstores reacted immediately to the new competition, though. OD2 halved its download prices, albeit for an unspecified period. The company will sell bundles of 40 songs for $35.40. As OD2 is effectively a wholesaler of digital music, the offer will be available to U.K. customers of its clients, which include MyCokeMusic.com, MSN Music Club, Wanadoo, HMV Digital Downloads, Tiscali Music Club, Ministry of Sound and Virgin Downloads.

“Since we launched, OD2 has taken the initiative to grow this market,” said OD2 topper Charles Grimsdale. “We have the best retail partners, the most comprehensive range of artists — and the best deals. This latest offer is our best yet.”

Other competitors wryly applauded Napster’s entry to the marketplace. Paul Myers, founder of U.K.-based upstart Wippit, said, “We welcome Napster as we’re sure their big budget will convince people to move to using legitimate downloading services, rather than illegal free sites.”

Wippit has caused controversy in the U.K. by offering songs for as little as 51¢ per track as well as an unlimited download subscription service for $88.60 a year. On Napster’s pricing plan, Myers said: “Ultimately, Wippit will benefit because our service offers the same tracks at 70% less cost.”

Wippit has carriage agreements similar to those of Napster and OD2 with all but Universal and Warner and expects to ink these deals within a month.

The British launch is expected to serve as a beachhead for planned expansions into other European countries in the near future.

(Ben Fritz contributed to this report.)