Jones+T+Strategy+Report

Jones T

TO: Proximity Music Team FROM: Travis Jones DATE: February 22, 2010 SUBJECT: Napster Strategy Report

Here is my strategy report on the music file sharing service Napster.


 * Company Profile**

Napster was the pioneer peer to peer file sharing program, starting in 1999 and running until 2001. A court order in 2001 shut down the company after various law suits were filed on the basis of copyright infringement. In 2003 the company brand name and logo was purchased by Roxio, Inc. in a bankruptcy auction. Currently the company is owned as a subsidiary of Best Buy who purchased Napster in 2008 for $121 million (Wikipedia Napster Pay Service, 2010).

Napster offers music on a subscription basis with the most basic package costing between $5-7 per month. Members of the service also have the option to purchase DRM-free MP3's for a discounted price. Napster also offers the Napster To Go package which is the companies "portable subscription tier service" (Wikipedia Pay Service, 2010). This service allows for customers to transfer their music to any MP3 player, PDA and cell phone for $14.95/month and also includes unlimited streaming capabilities. Napster also supports an online music store which allows customers to purchase single songs with no monthly fees and Napster Mobile which allows users to use the Napster service through any mobile device. (Wikipedia Pay Service, 2010).


 * Competitive Landscape**

Napster's competitive landscape is driven by the following forces:
 * Services which allow users to "rent" music or pay a monthly subscription such as Rhapsody.
 * Services which allow users to "buy" music through online music stores such as iTunes.
 * Services which allow users to stream music for free such as Myspace or Pandora.

The online music world is driven by the "buy, rent or steal" model. Napster allows users to buy or rent music and allows for some free streaming. The major problem facing Napster is buyer power. With iTunes, buyers have the ability to buy songs when they want with no monthly fee however Napster locks in their customers with a monthly fee and limited downloads but unlimited streaming (Costello).


 * Napster's Strategy**

Napster does not appear to have a coherent strategy. In a world where online music providers need to choose between the "buy, rent or steal" strategy, Napster is stuck between the buying option and renting option. Napster would be better off focusing their efforts to either an online store or a pay per month service which they offer now as the standard. Napster also suffers from poor name association based off the lawsuit in 1999. Most people are unaware or just do not care that Napster is now a legal online music provider with the emergence of iTunes as the favorite alternative. Napster would be better off changing its name and then picking one service and sticking to it.


 * Gen-Y Implications**

Napster is in a unique situation when it comes to Gen-Y. Most people are familiar with the name "Napster" but remember it only as the illegal music downloading service. This makes marketing towards Gen-Y a difficult situation. Gen-Y will continue to look for new means of obtaining music online and Napster has to find a way to attach a positive meaning towards its name.


 * References**

Costello, S. (2010). //Best Music Download Service Comparison Chart.// Retrieved March 03, 2010 from IPod About:http://ipod.about.com/​od/​downloadservicereviews/​a/download_chart.htm.

//Napster (Pay Service).// (2010). Retrieved February 22, 2010 from Wikipedia: http://en.wikipedia.org/​wiki/​napster_%28pay_service%29.

//Napster.// (2010). Retrieved February 22, 2010 from Wikipedia: http://en.wikipedia.org/​wiki/​napster.

//Napster Company Information.// (2010). Retrieved February 22, 2010 from Napster: http://www.napster.com/​press_room.html.