Napster today introduced a portable version of its digital music subscription service, backed by a $30 million print and broadcast ad campaign that takes aim at Apple's iPod and iTunes Music Store. Napster's promotion will include a Super Bowl ad, called "Do the Math," that argues it would cost up to $10,000 to fill up an iPod, while it would only be $14.95 a month to load up an alternative player through the new Napster To Go service. The ad campaign also includes strategic alliances with companies that make rival players to the iPod--Creative, Dell and iRiver...
Apple CEO Steve Jobs said he does not believe that there is a significant number of music fans willing to pay $180 a year to subscribe to a collection of tracks that they do not permanently own. "When you rent stuff, in the end you're left with nothing," Jobs said. [iPodLounge]
When you pay for cable TV for a month, you're left with nothing if you stop paying too. But that doesn't stop people from paying for cable TV.
Lemme see... to spend as much on Napster To Go as it would take to full up an iPod, you'd have to subscribe for, oh, about 55 years. So let's just say subscribing to Napster To Go for life is about equal in cost to filling up an iPod. But if you fill up an iPod, you only have those 10,000 songs. With Napster To Go you've got every song in the world that has been deemed significant enough to add to the database. Virtually song you want to hear at any time, you'll be able to hear. No limits. (Due mostly to contractual issues, there are real limits to what can be found in subscriptions services today, but the size of such collections will asymptotically increase toward completeness over time. And hey, you still can't get the Beatles through iTMS.)
Right now, though, the one-at-a-time sales route makes more business sense for Apple, because if you have hundreds or thousands of purchased iTunes songs, you're going to think twice before buying an incompatible portable music player. From their point of view, it's worth a shot as a strategy. whether it will work depends on the success of Napster To Go and other such services.
I also think it might be worth quoting an exchange I had in the comments section of an earlier post I did on subscriptions, where I said the subscription model was clearly superior:
And here's one reason it isn't superior: when I stop paying all the music goes away
Posted by: Steve Jobs at October 12, 2004 08:33 PM
But, unless you were planning to stop buying music piece-by-piece, you'll be spending money in the future on music anyway. And I, for one, have no such plans. So, I don't see how the "when I stop paying all the music goes away" has much merit in the real world. But the other arguments I list in my post do have merit in the real world.
Posted by: Gary Robinson at October 13, 2004 06:16 AM