(May 1) - All the songs on Napster are free again.
In a bid to gain traction against Apple's dominant iTunes online music store, Napster over the weekend shifted to an advertising-supported model. Visitors can listen to any of the 2 million tunes in its catalog without having to fork over a credit card or download the Napster software application.
But there is a catch. You can only listen to a song five times. After that, you have to either buy it for 99 cents or sign up for a monthly subscription.
Still, "This is the closest we have ever come to the original vision of the Napster service that swept the world in 1999 - except now, it's legal," says Napster CEO Chris Gorog.
Napster has 600,000 subscribers. It offers unlimited online listening to songs for $9.95 a month, or $14.95 for a version that lets you transfer songs to certain portable devices.
The service is compatible with digital music devices that include the SanDisk Sansa and Samsung Z10, but not Apple's iconic iPod, which has a 77.6% market share, according to researcher NPD Group.
Napster, the original unauthorized music-swapping site, was born in a college dorm before the record labels persuaded the courts to shut it down. The new Napster, launched in 2003, has lost more than $73 million over the last two years, according to equity firm American Technology Research.
The company, now based in Los Angeles, spent heavily in 2005 on an advertising campaign that included a Super Bowl ad. That helped increase sales "by 100%," Gorog says.
Now Gorog says the boom in online advertising can pay off for Napster, which averages 2 million visitors a month to its website. Walt Disney and Guitar Center have signed up as sponsors; more will be announced this week.
"Napster clearly had to find something different," says American Technology Research analyst P.J. McNealy. "But until the device market for non-iPods picks up, Napster faces an uphill battle."
To pull off the ad-supported music model, Gorog needed the approval of the record labels, which will get a cut of the ad revenue.
"Ad-supported music is something we've been encouraging all the services to try," says Larry Kenswil, president of Universal Music's eLabs unit.
Napster competes with RealNetworks' Rhapsody service, among others. Rhapsody also has a free preview, letting users sample 25 songs a month at no charge. Real says it has 1.4 million subscribers for its music properties.
David Card, an analyst at JupiterResearch, says Napster's ad-supported model gives users a better feel for the service and will encourage them to become subscribers. "It's a really good offering," he says.
Napster hasn't found more acceptance from its subscription model "because it requires explanation and a change in consumer behavior," he says. "This promotion will help people understand subscriptions."
Sounds like a publicity stunt to me. Also it's not like this is so innovative, Yahoo! music, AOL music ect. have been doing it for a long time.
