Napster

Napster Case Study

Napster Case Study

What is Napster’s business model?

Overall the industry thought that the people providing the music content and the distributors of MP3 would be able to work together. The idea for Napster was to amass large numbers of subscribers ( Napster had over 20 million ) and charging those subscribers a small fee for content access. Once the subscribers were use to using the service then an annual subscriber fee would be introduced with the revenues being split between Napster and the content providers. The flaw in that model, in my opinion, is that Napster had already let the cat out of the bag in regard too freely available music downloads. The young demographic using Napster was very anti-commercial and for them the term “free” also meant “no-fee”. Napster would have probably been better off launching the site with a nominal annual fee for basic functionality and then offered tiers of service at higher annual costs to obtain the more robust content access.

How have Napster and MP3 changed the music industry?

Napster and MP3 ushered in the age of digital music. Napster launched initially in 1999 almost 4 years ahead of iTunes. I think Apple learned from the mistakes of Napster’s business model and has since created the most successful on-line music library for purchase environment. I think Napster had a number of impacts on the music industry. First lets look at content access. Until Napster people had to purchase music burned on to CD’s from music stores. When Napster opened its doors people could obtain music with just a few clicks of their mouse without every having to leave their home. This dove tails nicely into the other impact Naapster had on the music industry, which is the demise of the “entire CD purchase”. If one was going to buy a CD from a favorite artist, the entire CD had to be purchased. Anyone who has purchased a CD knows that on an average twelve song CD you may have a number of songs that you do not care...