Commentary: Napster to Go -- Do Hedged Bets Equal Innovation?

How do you get 1 million songs on your iPod?

In the new world according to Napster 2.0, you don't. And according to Napster’s recent Super Bowl ad, if you choose to buy music through iTunes, you could be spending up to $10,000 of your hard-earned money just to fill your iPod. Napster can think of better ways to spend your $10,000—that’s the cost of its subscription service over the average user’s listening lifetime.

Welcome to the latest round of the age-old debate: online music subscription services vs. online music purchases.

Before the iTunes Store debuted in April 2003, "subscribe vs, buy" was a debate that primarily consumed attendees of shows like StreamingMedia, and the debate at these shows was much more academic than practical. The music labels were hesitant to sell digital downloads, and early attempts at providing songs on a subscription basis had faltered, primarily due to the fact that the "Big 5" music companies were trying to sell direct, effectively limiting each label to its own limited catalog.

Fast-forward to 2005: Apple's iTunes Music Store has sold 250 million downloads that span all of the major labels in less than 21 months. These 250 million downloads were sold piecemeal, at $.99 per song or $9.99 per album. While this only accounts for a small percentage of total music sales, it provides a glimpse of the importance that the music labels have put on digital music delivery. It also accentuates the rapid acceptance on the part of a growing body of music lovers who are willing to pay to own their music, even when the majority of the music they are paying for is available (albeit illegally) for free on the Web. A collective sigh of relief could be heard in the streaming world; finally the "subscribe vs. buy" argument had some real financial data with which to fuel the debate!

Enter Naptster: once the poster-child of the "free music, any way you can get it" crowd, Napster has been revived, bringing nothing back from the dead save the name (apparently not only can’t you take anything with you, but you also can’t bring anything back). Napster’s history—while sordid—is well known, so the name has the legs to drive enough of its former "customers" to take at least a cursory glance at the new and improved Napster 2.0 subscription service.

Napster's re-entry into the market brought the "subscribe vs. buy" debate back to life again in full force, given the fact that the Napster service is offered not by one of the Big 5 but—similar to iTunes—by a software company. The software company behind the scenes for Napster is parent Roxio, makers of the Popcorn DVD-extraction software and Toast, a well-known Macintosh CD-burning software program. (Roxio recently sold off its software division to Sonic Solutions to focus full-time on Napster.) Given the symbiotic past relationship between Roxio and Apple, the fact that Napster squarely targeted Apple’s iPod/iTunes combo in its Super Bowl commercial apparently means that all bets are off, and that Roxio feels it can win this battle. Said an unnamed Roxio spokesperson when the company acquired Napster’s remains from bankruptcy court in 2003, "The record labels know we want to do this the correct way and the legal way."

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