Three years ago it took only one word to strike fear into the heart of even the most complacent and bloated record company executive — Napster. Now the music download service that threw the entire industry into a frenzied bout of cost-cutting and consternation is back, and this time it is legal.
The original Napster, launched in 2000 from the back room of his uncle’s garage by 19-year-old college student Shawn Fanning, was a genuine phenomenon. At the height of its popularity, more than 100-million users were gorging themselves on free music via a vast network of linked computers.
By the time it finally collapsed in 2002 under a welter of legal challenges, following a failed rescue attempt by German media giant Bertelsmann, the attention had already turned to the new generation of peer-to-peer file sharing networks that were giving record companies sleepless nights.
Gambling on the residual affection for the Napster brand, software company Roxio bought the name as well as PressPlay, the doomed downloading service launched by Sony and Universal.
Chris Gorog, a former executive at Walt Disney and now Napster chief executive, was brought in to help Roxio break into the entertainment business.
”Now we’re in the process of writing the record industry cheques for millions of dollars, we have their attention,” he says.
This time it is for the right reasons. The United States service, launched last October, has already sold more than five-million tracks.
In London to publicise the United Kingdom launch, which will be ”before the end of the summer” and be headed by former MP3.com Europe chief Leanne Sharman, Gorog — a keen blues guitarist whose musical tastes range from ”Hendrix to Mozart” — is convinced the service that started the digital music revolution will have a major say in its evolution.
”We’ve positioned ourselves well. We were fortunate, in a way. There was a lot of bloodshed in the legitimate online music industry in the late 1990s. By the time we came along, all the record labels had acquiesced and agreed this was a good idea. They’d agreed to CD recording, they’d agreed to output to devices and made some fundamental decisions that were essential for there to be a decent consumer offering.”
At last, several factors have come together to convince record labels and publishers that the only way to combat the spread of peer-to-peer services, which have flooded the Web with millions of free tracks, is to license huge swathes of their catalogue to legitimate services such as Napster.
Universal recently said it had sold about 300 000 tracks legally available for download, while EMI signed its 50th such deal, with groundbreaking UK download service Wippit. In the US, the download service launched by Apple last year to boost sales of its iPod music player has sold about 30-million tracks at 99 US cents each.
It is credited by many with breaking the deadlock with record labels and making a consumer-friendly, easy-to-use download service a reality. It, too, is planning a European launch and the battle lines with Napster are being drawn.
Apple uses its own download format: iPod owners can download songs only from iTunes. This leaves Napster in the odd position of being unable to sell music to owners of the world’s most popular digital music player.
”Napster is a Windows media audio house designed around that digital rights management,” Gorog says. ”We are a believer in the technology and we believe it’s going to be — and basically is — the ubiquitous platform. Companies pushing a propriety agenda are consumer-unfriendly … because they’re cloistering them in an experience that they can’t leave and eliminating choice.”
Gorog believes pressure from iPod owners will force Apple to reconsider its stance: ”The iPod is great if you’re happy to only shop at one record store. It’s like buying a car and finding you can only drive down one road. I think consumers, when they understand that, will be kind of pissed off,” he says.
Howard Stringer, the US Sony chief, said last week that he believed iTunes was ”selling a lot of iPods but not making us much money”, confirming the views of others that Apple see it as a loss-leader to sell hardware rather than a fully-fledged music retail operation.
Napster and iTunes will not be the only ones launching paid-for download services this year. Dozens will jostle for position, including the likes of Coca-Cola.
Gorog believes Napster’s commitment to music, its community features, its brand and its hybrid model of subscription and a la carte downloads will give it the edge.
As well as selling single tracks, Napster will offer a subscription option. For a monthly fee, set at $9,95 in the US, users can download as many tracks as they like, although they pay extra to burn them to CD or transfer them to a portable player.
”The a la carte download model is a great catalyst because it’s very easy to understand. We believe the subscription opportunity offers greater value and in the mid- to long-term will be the way that most people buy their music,” says Gorog.
In his vision of the future, users will download thousands of tracks to their hard-drives and use it to power their home entertainment wirelessly.
Gorog points to how the brand retains enormous affection.
”People still love the brand. We’ve been able to take Napster into a paid model but they still use the same adjectives to describe it — innovative, independent, cool, renegade.”
Key to this, he says, is that it has remained true to the ”original Napster values” of ”virtually unlimited choice, the largest music catalogue in the world and an experience that enhances discovery. Most importantly, it has the community aspect of the original.”
Gorog hopes this community aspect, which he says was heavily pushed by original founder Fanning when he came on board as a consultant, will help give Napster an edge over competition. — Â