Much has been made about the recent launch of an ad-supported version of Napster. They are not the first digital music service provider to offer this. RealNetworks did something similar with Rhapsody, except with Rhapsody, the first 25 songs each month are free and then you have to pay; whereas with Napster, you can listen to as many songs in their library but not any one particular song more than 5 times before having to pay. I like Napster’s approach better. It’s much more conducive to browsing and discovering new music without worrying if my ‘quota’ would run out.
Napster also intro’d Napster Links, a way of syndicating music, which is a great move (and not unlike what Brightcove is enabling content owners to do for video, but that’s a topic for another post). For instance I can ‘post a song’, like My Morning Jacket’s Off The Record and you can listen to it.
I wish Napster Links were integrated with the Napster player. Today you have to visit the main site to access Napster Links. Also the Player only plays 1 song at a time and doesn’t support playlists. When you search within the player, it spawns a web page with the results rather than rendering them in the Player. So the UE needs some work but I’m guessing they had to walk the fine line between encouraging usage but not cannibalizing the much more profitable subscription revenue stream. So playing 1 song at a time forces the user to look at ads in the Player when it pops up with the new track in question.
Speaking of revenue streams, ne analyst estimated that the new ad supported Napster, with its 1.9 Million monthly uniques, could bring in $50 M in revenue. Now I don’t know the context of where he got this number but, on the face of it, it sounds absurd.
All in all, a nice first effort by Napster but you can tell their heart is in the subscriptions business by the way they’ve hobbled the functionality in the ad-supported player. I could be mistaken but I see this as more of a customer acquisition play with ads subsidizing their costs, rather than a play to actually create an ad-supported business that can stand on its own (I’m assuming they have to pay about $0.01 per play, which I’ve heard is the going per-performance rate for on-demand listens subject to a rev share). That means that each track has a licensing cost of $10 CPM, not to mention bandwidth and everything else. Still, if their existing subscriber acquisition numbers are indeed $100, that’s a lot of free tracks to let people listen to, to entice them to subscribe.
I don’t think I’ll regularly use the service but I do look forward to using Napster links to showcase music, and I applaud their (and the labels’)efforts to offer consumers more choice.