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Tuesday, May 02, 2006

Online music subscription gets interesting

Napster today announced that it aims to compete in the online music subscription/downloads market through ad-supported free music streams. Obviously, this is an aim to have an edge over its rival ITunes. However, there is a catch - users can listen to any of its 2 million song inventory for a maximum of 5 times (they need to register first). After that, it is 99 cents a song for unlimited listening or subscribe to 2 ad-free subscription offers.

This news is quite interesting because we were doing a similar case study on RealNetworks' Rhapsody music service (case was dated back in 2002) and they were figuring out how to make money out of the online music subscription/download business. Although they planned on having an online digital radio for users ultimately, we felt that they were probably ahead of their time because connectivity was not ubiquitous even today.

However, an ad-supported model probably made better sense - I am still not sure whether users would want to pay 99 cents / song to listen to it forever. Probably, they could have made it 99 cents to download the song for good after listening to it 5 times for free.

We will soon see how visionary they were :)

Cheers,
Thyaga

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