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Napster Case Study Pdf

 

 Napster (2005), quoting Forrester Research estimates that United States purchases of downloadable digital music will exceed $1.9 billion by 2007 and that revenues from online music subscription services such as Napster will exceed $800 million by 2007. BBC (2005) reports Brad Duea, p

resident of Napster as saying: „The number one brand attribute

at the time Napster was shut down was innovation. The second highest characteristic was actually

free

. The difference now is that the number one attribute is still innovation. Free is now way down on the list. People are able to search for more music than was ever possible at retail, even in the largest megastore."

The Napster online music service

 Napster subscribers can listen to as many tracks as they wish which are contained within the catalo

gue of over 1 million tracks (the service is sometimes described as „all you can eat‟ rather than „a la carte‟). Napster users can listen to tracks on any compatible device that includes

Windows Digital Rights Management software, this includes MP3 players, computers, PDAs and mobile phones. Duea describes Napster as an "experience" rather than a retailer. He says this  because of features available such as:

• Napster recommendations • Napster radio based around songs by particular artists • Napster

radio p

laylists based on the songs you have downloaded • Swapping playlists and

recommendations with other users iTunes and Napster are probably the two highest profile services, but they have a quite different model of operating. There are no subscribers to iTunes, where users purchase songs either on a  per track basis or in the form of albums. By mid 2005, over half a billion tracks had been  purchased on Napster. Some feel that iTunes locks people into purchasing Apple hardware, as one would expect Duea of Napst

er says that Steve Jobs of Apple “has tricked people into buying a hardware trap”. But Napster's subscription model has also been criticised since it is service where subscribers do not „own‟ the music unless they purchase it at additional cost, for exampl

e to burn it to CD. The music is theirs to play either on a PC or on a portable player, but for only as long as they continue to subscribe to Napster. So it could be argued that Napster achieves lock-in

 

Objective:

Viability of Napster as a revenue generating company.

Case in brief 

: Napster is a brainchild of Shawn fanning, launched on June 1 ,1999 as a peer-to-peer music downloading program for college students. Napster became a oneof the most popular sites on the internet, claiming some 15 million users in littlemore than a year. From the beginning, Napster facing so many problems fromthe RIAA and music industry players. Napster violated the copyrights byallowing users to swap the music recordings for free. However, on March 5,2001 Napster was ordered by the U.S. court to stop trading copyrightedmaterial. The following Year Napster filed for bankruptcy and was bought out by Roxio Inc.

Key success factors:

The main point in the case is the Principle of copyright protection will enablethe Napster to transform itself from a freeloader¶s paradise to a revenuegenerating business in the face of competition. Before considering the viabilityof Napster as a revenue generating company, analysis of key drivers of successis required. Napster is the first success story of distributed computing which isusing unused capacity of the millions of computers on the Internet be anefficient source of processing power. Napster, with its central servers, is not the purest form of distributed computing, but is an important step in that direction.The development of MP3 format and portable MP3 players has played a major role in success of Napster.

Situation Analysis:

If the Napster providing a service of copyrighted materials, it has to charge for these services. In this case, copyrighted music is tightly held by the recordingindustry and the cost to acquire those assets are extremely high. Given thatcopyrighted music is tightly held and the limited nature of Napster¶s financialresources, Napster can only hope to acquire these assets through alliances.Moreover, an alliance will not be useful unless a minimum number of recordcompanies commit to this alliance.

Strategic alternatives:

Despite the reluctance to pay for online content, have to create a awarenessthat content cannot remain free forever, driven by awareness of financial