Napster At 500,000 Subs; Why They're Different Than iTunes

This last Thursday it was announced that Napster had reached half-a-million subscribers. Doubling its number of subscribers in the past year alone, the former rogue P2P filesharing program has made gains in cutting into the marketshare of leading legal music vendor iTunes. Unlike iTunes, however, Napster has implemented different strategies in its attempt to lure legitimate customers and to rehabilitate its once scarred image.

For one, Napster has struck deals with college campuses all across the US where students can access the service for 'free' as part of their tuition fees. And as a subscriber myself, I can tell you that the company allows users to download as much of the company's catalog as they want (certain restrictions apply, of course) and to listen to that music on authorized computers for as little as ten bucks a month. Sweeter deals are available too. For instance, if a user wants to transfer that music to an authorized MP3 player so s/he can listen to it away from her/his computer, an extra $5 a month is serviced as part of the Napster2Go program.

What seems to differentiate Napster from iTunes is access. Napster's corporate mantra is making available to the customer, as much music to listen to as possible, for a flat monthly fee. The program is a system where "customers can 'rent' music while they remain subscribers or can buy outright for around 99 cents a track." iTunes, on the other hand, takes a more minimalist approach and chooses to sell songs themselves for an average of 99 cents a piece---without a monthly subscription fee. In other words, you pay for music you want only when you want.

Napster is also big on personalization. As its users rate and download songs, the program generates suggestions of similar artists and tracks the user should probably like. In fact, one has the option to download "Your Playlist Today," a myriad of songs that Napster claims the user should download for that day. (Think Tivo Suggest).

Owning 83% of the marketshare, iTunes is still king when it comes to digital music sales. But with $100 million on Napster's balancesheet and an increase in subscribers, the company's future holds promise:

'With exciting new development in the pipeline and over $100 million on our balance sheet, we are extremely excited about the future of Napster'. ~Chris Gorog, Napster CEO/Chairman