Villa+S.+Strategy+Report

Villa S

 To: Proximity Music Team From: Scott Villa Date: February 28, 2010 Subject: LimeWire Strategy Report


 * Profile **

LimeWire is a free peer-to-peer file sharing service compatible with Windows, MAC OS X, Linux as well as other operating systems supported by Java. LimeWire was initially released on May 29, 2000. Lime Wire LLC develops all the software and is a subsidiary of Lime Group. LimeWire offers the sharing of its library through the Digital Audio Access Protocol (DAAP). As such when LimeWire is running and configured to allow it, any files shared will be detectable and downloaded on the local network by DAAP-enabled devices (e.g. Zune, iTunes).  (Wikipedia, 2010) They offer two versions of their program; a basic program that has no charge, and the up-graded version, LimeWire Pro. LimeWire Pro is sold for $21.95 with six months of updates or $34.95 with one year of updates. The company claims the paid version provides faster downloads and 66% better search results. (Wikipedia, 2010)

** Though it’s tough to compete with free peer-to-peer file sharing, some of LimeWire’s greatest competition comes from sources such as iTunes**.** In 2007, LimeWire opened LimeWire Store, a site that is similar to iTunes in which one can buy individual songs or albums using a monthly plan or pay as you go plan. There are four payment options with LimeWire’s online store, with $20 per month getting your 75 songs, $15 for 50 songs, $10 for 25 songs, and a pay-as-you-go option. (Kristen Nicole, 2009) The music offered by LimeWire is DRM-free (Digital Rights Management) which means that users may listen to the music on any device they choose and for as long as they want. Some of the music downloaded from places such as iTunes will have limitations in some cases. Another source of competition that LimeWire faces come from the various illegal sites that allow free downloads. The question will always be raised, why should I pay for music when I can get it for free? The answer simply being that you have no idea what the source of that music file is. Though LimeWire does offer free peer-to-peer sharing, they make greater efforts to ensure that the files downloaded are virus-free.
 * Competitive Landscape

** In the music downloading industry buyer power is very strong since there are so many ways of downloading music. I’ve already discussed only a few of LimeWire’s many competitors. LimeWire distinguishes themselves from most of the rest by offering their P2P version as well as LimeWire Store which gives users a variety of ways to download. DRM-free music also gives buyers an incentive because who wants to download music that has limitations on how and where it can be listened to. In a way, one of LimeWire’s biggest competitors is itself. There are many things that distinguish them from other companies, most importantly the fact that they offer a free version of their software. Though I’m sure many users pay the monthly fee, there is still a huge amount of revenue lost to free peer-to-peer sharing. LimeWire must create a way to give users the incentive to switch versions or become a customer at the LimeWire Store.
 * LimeWire’s Strategy

 LimeWire’s low cost and easy access to free music downloads, makes it very popular amongst Gen-Y consumers. I believe that LimeWire is much more popular with Gen-Y consumers than it is with that of other generations. This is probably the case since Gen-Y consumers are most interested in getting their music at the lowest price possible. Also, older generations tend not to be as technologically savvy and will use whatever software is most popular (e.g. iTunes).
 * Gen-Y Implications **

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http://mashable.com/2008/03/17/limewire-online-music-store-2/ [|Kristen Nicole]