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ATPM 11.03
March 2005




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by Wes Meltzer,

Let Them Speak With Their Pocketbooks

It’s amazing how much difference a commercial can make during the Super Bowl—for instance, Ridley Scott’s brilliant “1984” Apple ad, or the truly awe-inspiring “Office Linebacker” spot (near the bottom of the page) in 2003. Sometimes.

Then, there’s this year’s gigantic, Apple-related flop: the Napster ad.

If somehow you missed the ad—or the big game—let me put it to you this way: you didn’t miss very much at all. This extra-exciting waste of $2.4 million was a masked figure holding up a sign (falsely) demonstrating that it cost $10,000 to fill an iPod, and only $14.95 per month to use Napster To Go. Never mind that your average Super Bowl viewer, much less the average football fan, doesn’t want to read anything except the scoreboard. USA Today ranked the ad 54th out of 54 ads, i.e., dead last. Behind even an ad for contact lenses.

I had a teacher once, when I was an impressionable freshman in high school, who said, “You know, everything is related to everything else. Nothing stands in isolation.” Napster’s lame, expensive dig at Apple is just another demonstration of the futility of trying to sell music online in a market where more than three quarters of disk-based MP3 players are iPods. Apple is sitting pretty on top of the pile of Internet brands, having outdone even Google for most global impact, and it doesn’t look like Napster is taking that away any time soon.

Now the real question is, I suppose, “Will people use Napster, and by extension Napster To Go, instead of the iTunes Music Store? Is it more cost-effective?”

We’ve had this debate before, in this very same space, and I still disagree. Gary Robinson is back, with more math this time, and he sticks with Napster’s argument: it costs $10,000, give or take a few pennies, to fill up an iPod, and you would need to subscribe to Napster for 55 years to spend that much money on music, in the meantime listening to far more than 10,000 songs. Of course, he thinks Apple is using iTMS to keep customers from switching away from their brand, which seems a tad far-fetched for a product with as commanding a mind share as the iPod, but the numbers are worth considering.

John Gruber, naturally, disagrees. He thinks that even bothering to compare a subscription model service without any bundled hardware to a piece of hardware with an optional music store shows how desperate Napster, and Real before them, are for product recognition. He adds, and here I concur whole-heartedly, that he thinks most iPod owners spend much less than $100 per year at iTMS, which puts them under the $180 mark for a year of Napster service as well. I don’t often acquire new music, because I’m without extensive disposable income, but when I do, I have been known to buy CDs. With Napster, it would be highly cost-ineffective to acquire CDs, except in the event that I rejected the possibility of giving up some music.

At The Register, Ashlee Vance agrees that someone at Napster is sipping the crazy Kool-Aid. She writes:

[Y]ou still don’t own the music. You rent it. Stop paying the Napster tax man, and all your music disappears…This forces you to make a choice between quantity and permanence. Pay Napster every month and gain access to an almost limitless supply of music or buy select CDs, as you have in the past, and own them for years.

Vance does a little math, too, and suggests that a three-year total cost of ownership for a Napster-compatible device is much higher. Here’s how it goes:

Let’s take a look at consumer A. This consumer goes to and does a search for Creative—one of the Napster supported music device makers—and picks up a 20GB player for $249.99. Let’s assume he keeps the device for three years, paying Napster all the time. That’s $538 for the Napster service, bringing the three-year total to $788.19.

Consumer B types iPod into the search engine and finds a 20GB device for $299. Apple doesn’t offer a subscription service, so this customer has to buy songs at the 99 cent rate or at $9.99 per album. Subtracting the price of the iPod from the $788, consumer B would have $489 left over for music. That’s roughly worth 489 songs or 49 albums.


Customers do not, as Napster suggests, pay $10,000 to fill their iPods with 10,000 songs just because the capacity is there. They take their existing music, CDs and MP3s, and put that onto the device first, then later add iTunes songs as they go along. A Napster customer would have a similar mix of old music and new downloads.

Even if it turns out consumers prefer the subscription model, Charles Arthur at NetImperative thinks Steve Jobs will just co-opt it… like he just did with the flash MP3 player market. This sounds so solid, I will not even make my customary offer to eat crow if I’m wrong about subscription services.

I don’t think I am, though. And the measure of desperation I smell from Napster these days just confirms that.

In Other News From the Mac blogosphere

  • We’re still getting news in about the iPod shuffle, it seems. Julio Ojeda-Zapata, one of my favorite tech columnists, doesn’t like the iPod shuffle. Pity, that. iPodLounge, on the other hand, likes the shuffle—they call it a “gateway drug for iPod users”. How fun! In the meantime Robert Scoble has to get in his obligatory dig at Apple, who is giving every employee a shuffle, because clearly that’s an anti-competitive practice.

  • Everybody loves the Mac mini! That’s a nice contrast to the iPod shuffle. David Pogue likes it, and somebody at AppleTalk Australia likes it so much he modded it for more hard drive space to make it into a server. Not to mention the guy who figured out how to mount his mini to the back of a plasma TV. Very impressive, guys. Now, if only you could remember to send me my complimentary model…

  • In case you like Apple accolades, James Duncan Davidson really likes Pages, and likens it to a consumer-level InDesign, not a direct Word competitor. But it still has the traditional Apple flair, he notes.

  • He’ll have to change his domain name to now! Evan DiBiase of MacAndBack is, well, switching back. He remarked, early in February, about minor peeves marring his Windows experience, and then, well, something just gave up in his Dell laptop, and it was all over for Evan and Windows. He’s now sold most of his PC stuff, to raise money for a new PowerBook. (As of the time of this writing, Evan’s auctions were still pending. But this will run after they close.) Welcome back, Evan!

  • Do PC manufacturers want OS X bundled on their desktops? Steve Jobs intimated that, in an interview with Fortune, when he also fingers Adobe for blowing their grip on the video editing market. Well, well. Really.

And that’s about it for this month’s whirl through the blogosphere’s news. Come back next month, with Napster still floundering and the very real possibility of Tiger leaks, and upcoming product chatter. And stay tuned, folks!

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