Feature Article
The New Napster

December 1, 2000
By Scott Lewis

Finally someone in the music industry took its head out of the sand long enough to realize the potential for Napster as a valid subscription model. But there are many unanswered questions to a paid subscription service based on Napster's file sharing architecture. 

A few months ago I told you about Scottster, my own idea for a paid subscription model. But in the wake of recent events I have noticed a number of big holes in my own plan, as well as possible problems for Napster as it attempts a pay-for-download business model. This month I want to address some of the holes in my own plan or any other plan. Also I would like to propose some ideas I have had time to think about recently to make a subscription model better. And let's not go without commenting on the vast hurdles any such service must still face.

Potential Problems for BMG's New Napster

What if BMG is the only company on Napster's side? Does that mean $4.95 a month for BMG only music? If so, how many subscriptions will you need to have? Do you need one subscription for Capitol Records material through Aimster, another for Time Warner, another for Universal, another for artists in conjunction with Real Audio, etc., etc., etc? With BMG's recent paid downloads announcement aren't they competing with themselves? Does it mean Napster still gets shutdown if it loses the lawsuit, and the BMG deal is worthless? If the lawsuit goes to completion and Napster wins, would that mean they wouldn't need BMG or any of the music companies and they can get revenue from some other source and let music still be free?

Problems for any Service (even my own)

If I share songs I am  essentially using my time and effort to rip and encode CDs and provide storage and bandwidth for others. Where is my compensation if it is a paid system? What is to stop me from  keeping the shared folder empty? If this becomes a trend will the service dry up of music? Should they compensate people for "uploads"? After all they already say that people tend not to share. On a pay system I would expect fewer people to share freely.

What about joining for only one month a year and grabbing all the music you can? I addressed this in Scottster, but have yet to see any mention of how this will be done with the New Napster.

What if I don't download any songs in a month? Will I get a refund/credit? If not would this have me think twice about paying a monthly subscription price?

What can be done

Many of the things that can be done to help a subscription model prosper were addresses in my previous article. Such as:

  • A truly useful promotional e-mail system that would help people find the music they will want to hear and download.
  • Providing a truly good service that will drive people away from the hassles of a free system. (I am thinking of calling this the AOL factor. AOL provides a good enough service that people in droves are willing to pay more to use them than a traditional ISP, even though there are many ISPs that are much cheaper, even free.)

However, this still doesn't address many of the new problems I have mentioned above. Let's try to tackle some of them.

Instead of an "all you can eat" subscription model, what about a pay-per-download model? In fact, what about a tiered per download system? How about 64Kbps MP3s for free, 128-160Kbps MP3s for a small fee, say 50 cents each? We could even charge a premium of $1-2 for an uncompressed, true CD quality WAV files ready to burn to a CD-R. Perhaps we could have a tiered monthly fee for volume. Zero songs would be no charge, 1-10 songs would cost $1 a month, 11-20 songs $2, etc.

What if the lawsuit reaches completion? This is the biggest question, and the hardest to answer. Either result of the suit will null the BMG/Napster alliance. Napster won't need BMG if it wins and can resort to an advertising revenue stream leaving the music companies hanging out to dry (I would hate this if it ended up hurting the artists too). If Napster loses BMG probably can't make a paid Napster work without the support of the other companies. Also, if Napster loses it would most likely be forced to pay damages that would surely put them out of business... unless BMG paid the settlement to the other music companies.

That means that a settlement is in everyone's best interest. Napster's, the record companies', and the consumer's. Without a complete settlement I doubt Napster will survive in the long run. But the key point of my previous article is still the key point to success here. Make the service good enough that people will gladly pay for it. Good enough requires music from all the companies, so we need a settlement.

It may be too late. Napster is not perfect, but it works well enough and is fairly easy for most netizens to use. 38 million people will be hard to convince to start paying for something they have been getting for free.

In the end the music industry must embrace Napster and turn it into a paid service that is fair and good enough that people will run to them willing to pay for it. I am starting to think it is too late to get people to want to pay for something they clearly have gotten used to getting for free.

What's your opinion?