Thursday, October 09, 2003

Isn't it like i-Tunes?: The media (no, not that media, Rush) is buzzing about the anticipated return of Napster. Yes, that Napster, but now in 2.0 format. "2.0" not meaning that it's better of course, only that it's no longer free. It doesn't take someone of Eno's cynicsm for your first question to be: "Why?" Why, indeed. Clearly, the file-sharing cat is not only out of the bag, but it's up a tree. You're either still playing fast-and-loose in what can only be deemed a losing ploy for attention (i.e. Kazaa, LimeWire) or you're getting in bed with the big boys and it's time to pony up the loot (i.e. i-Tunes or MusicNet).

Since Napster is decidedly now on the side of the white hats, the question becomes if not "why" (we can assume to make Roxio lots of money), but "how?" The other players have head-starts and that little thing called stability. Here's how stable Roxio is:
Roxio has little hope in transforming the service into a major cash generator, says Justin Cable, an analyst with the research firm B. Riley, citing the company’s recent fumbles with its software, slim margins in the music-sales business, and competitive pressure on pricing in a field where new pay-to-play services are announced seemingly monthly. Mr. Cable says he doubts Roxio has the staying power to see the new Napster through to maturity. “We have seen Roxio achieve the largest market share in CD-burning software a couple of years ago, and then lose it,” he says.


At the end of its June quarter, Roxio’s quarterly revenue was down 25 percent sequentially to $24.2 million, as royalty payments from PC manufacturers that bundle their machines with Roxio’s CD-burning software also fell.
Meaning, another innovative company that is eclipsed by those who do the same thing better. Sure, it has the Napster name, and no one can take that away from them, but really, why would you?

My guess is that you'll see a huge amount of buzz, with an initial onslaught of subscribers, but unless Napster can merge its legendary ease of use with competitive pricing AND a good catalogue (which it seems to have), we may be faced with Napster 3.0 in about 2 years - this time as a porn site.

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