Napster is back, but for a price

By Derek Caney

NEW YORK: The name is the same. The game is a little different.

Napster, the file-swapping service that set music fans on their ears and sent the music industry into apoplectic fits, is resurrecting itself as a pay service two years after its free service collapsed under the weight of lawsuits.

Under its parent Roxio Inc., which bought the Napster assets out of bankruptcy in late 2002, Napster has introduced a test version of its new software that will sell individual songs for 99 cents each, albums for $9.95. or monthly "all-you-can-eat" subscriptions for $9.95.

Ironically, Napster sounded the opening salvo of the online music revolution in 1999 when it launched a free service that allowed users to download digital music from other users and in turn make their songs available to others.

The music industry has blamed such file-sharing services for its sharp decline in music sales over the last few years. Napster's relaunch is the latest example in a crowded field of online services aiming to convert an online community used to getting their music for free into paying customers.

One of the most successful of these services, Apple Computer Inc.'s iTunes, is widely expected to launch a version of its service for Microsoft Windows users next week. Others include RealNetworks Inc.'s RealNetworks Inc.'s Rhapsody service and privately held companies like MusicMatch and BuyMusic.com.

Dell Inc., AOL Time Warner Inc.'s America Online and Amazon Inc. are also considering services of their own. They all will continue to compete with free services like Kazaa, even as the record industry tries to stamp out such operations in court.

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WELL-KNOWN BRAND'

"Clearly Napster is a very well-known brand," said James Preissler, associate director of research for Majestic Research. "But there are other powerful brands out there, like AOL, Amazon, Dell and others. It remains to be seen what products they release and how well they compete."

He noted that the market potential for online music was huge for the service that was the easiest to use and provided the best value. "But it's way too early in the game to say who that's going to be," he said.

In its free incarnation, Napster garnered 60 million users at its peak, until the five largest record companies successfully sued for copyright infringement. It shut down in 2001, and after several attempts to relaunch as a pay service, it filed for bankruptcy protection in September 2002.

After its demise, several free sites emerged in its place, while the music industry struggled with different business models and generally regarded the technology industry with a mixture of fear and contempt.

But Apple's iTunes marked a turning point of sorts for both the music industry and the technology industry. The five largest music labels licensed their music to Apple on terms that were more liberal than ever before.

The service is currently only available to Apple Macintosh users, who represent 3 percent of the world's PC users.

Roxio's chief executive Chris Gorog welcomes the challenge. "If I were Apple, I would hate to compete with Napster. We have a larger catalog of songs. Our service has more breadth. And there's no brand more powerful than ours in online music."

Gorog declined to specify what his financial expectations were for the Napster service. "We ultimately expect Napster to be a substantial part of our overall business and ultimately overtake our core software business." He said it would spend $20 million on marketing before its launch.

© Reuters