Napster is hoping to take a bite out of the iTunes music pie by offering an unprecedented subscription service that includes free downloads, unlimited streaming on many Internet devices and on-demand music.
Big box retailer Best Buy purchased Napster, the former peer-to-peer service turned music store for $121 million in September 2008. The large purchase was a little questionable, according to A.G. Edwards broker Kerry Ellis of Idaho Falls.
“Why would [Best Buy] spend that immense amount of money as their profits began falling due to the economic downturn?” Ellis said.
Best Buy was tight-lipped about its purchase, leaving investors curious about how it hoped to incorporate the brand.
Now, eight months later, Napster has emerged as a new music subscription service which Best Buy hopes will buoy slumping music sales. Best Buy hopes their new Napster service will combine the best of top music providers iTunes and Pandora Internet Radio, according to a company press release.
The new Napster service features a $5 monthly subscription that will have access to seven million songs, the only service to rival iTunes’s 10 million song catalog. Perhaps the most intriguing part of the service is the ability to stream on-demand music from any Internet enabled device, excluding Apple’s iPod Touch and iPhone. This enables subscribers to listen to any song, in its entirety, whenever and wherever they have Internet access on devices such as laptops and various smart phones. The $5 subscription also nets consumers five song purchases per month.
Subscribers are not limited to purchasing five songs per month.
“Customers can purchase additional MP3s from 69 cents to $1.29 with this plan. They can still buy MP3s from the site if they prefer,” according to the Best Buy press release.
Also included in the subscription are 60 commercial-free radio stations, 1,400 pre-programmed playlists and 50 years worth of Billboard chart records, allowing subscribers to see what was popular back in the 1950s.
Napster’s new subscription seems like it could be a good value for consumers, Ellis said.
“Five bucks gets you five songs on either service [iTunes or Napster], but Napster allows its users to stream unlimited, on-demand music, something that Apple won’t let you do.”
For now, Ellis says he and other analysts are taking a wait-and-see approach as there are already several free music-streaming services available such as MySpace, imeem, and the aforementioned Pandora.
2009 Music Store Rankings and music titles available:
1. iTunes -— 8 million.
2. Napster — 7 million.
3. Amazon MP3 — 6 million.
4. Rhapsody — 5 million.
5. Zune Marketplace — 5 million.
6. eMusic — 5 million.
7. Walmart Music — 3 million.
8. Audio Lunchbox — 2 million.