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Friday 4th February 2005
Analysts see no threat to iTunes from Napster's new subscription service 12:51PM, Friday 4th February 2005
Napster is claiming its Napster To Go service 'will change the music industry forever,' according to Chris Gorge, Napster chairman and CEO.

=However, research group Forrester expects the service to herald a more prosaic shift.

Paul Jackson, principle analyst at Forrester said that he expects, 'subscription services will make a slight comeback', but added the caveat that 'they won't replace per-track services.'

The music industry's initial moves to offer music online legally were via the PressPlay and MusicNet services; services that singularly failed to shift consumers away from file-sharing.

Yet Jackson doesn't expect Napster To Go to suffer such a fate. Times have changed he says. 'There's evidence Napster's current subscription service is getting some traction. The big thing [to be successful] is that you have to be able to transfer the music to portable devices. But right now it's only a minority of people that download music to a portable device'. Most people, he says, download music to a PC and use that as a Hi-Fi in the home.

There are certain dynamics that are now in place that can make a success of such a subscriptions. The first is that the technology - in the form of Microsoft's Windows Media 10 DRM - can allow the transfer of music to portable devices, while still offering copyright protection.

In the case of Napster To Go, once customers stop their subscription, they DRM kicks in to prevent them from listening to any of the music they downloaded while it was still active. Jackson described the service as 'halfway between a radio station and downloading
 
 
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tracks'. However, he expected that subscribers will end up with certain tracks they'll want to keep, and will be wary of the potential of losing them. 'That is a barrier to those that consider themselves music fans,' he said.

But the way we consume music is changing. 'The kind of person that wants to buy their music has personal preferences about the type of music they like and likes a more customised experience, says Jackson. It's an easy argument to make: that most people have a core canon of music they like to listen to again and again. But that's not true across the board. 'Different generations show significantly different use. Teens have a far lesser attachment to the physical music product. Owning the music is not important.'

However, there are other factors that may work to the detriment of the subscription model. 'Per track prices must stay relatively high. Right now you might get 14 or 16 download tracks for the £14.95 per month. But if that 79p per track prices halves then suddenly the subscription model doesn't seem so attractive,' said Jackson.

He also warned that alternative ways to access music will impact on the success of subscriptions. 'There's also a danger in developing digital radio services. We're seeing satellite services from the US that while it's still radio, gives the listener a lot more control. And there are devices that can cache that content. So, while it's broadcast rather than point to point, it's still something that could topple subscriptions.'

Yet the operators of these services are convinced it is the way forward. Jackson can see why. 'From a business model perspective it makes a lot of sense. For one, it's an ongoing revenue stream. It doesn't suffer from overheads such as the cost of credit card transactions for individual downloads.'

But is the subscription what the operators want rather than the customers? 'That's the danger,' says Jackson. 'It's more about "can we tie the consumer in". [But to succeed] it has to be more attractive than the 'Pay As You Go' model.'

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