Roxio dumps software division, reborn as Napster

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My, that's quite a gamble, throwing away a profitable business
for one where even the most successful market leader only
makes a tiny profit.

I think The Register has a more realistic take on this story:
http://www.theregister.co.uk/2004/08/10/
roxio_turns_into_napster/

There is room to question the sanity of this decision. True
enough, Roxio wasn't that exciting as a consumer software
company, but at least it had firm ground underneath it. The
Napster music rental service seems a much more precarious
concept than selling consumers useful software.


Napster, which Roxio resurrected about two years ago, is way
behind Apple's iTunes service in terms of number of songs sold
and behind RealNetwork's Rhapsody service in terms of
subscribers. Napster is only pulling in about $7.9m a quarter.
Beyond this, Roxio has only sold $1.1m worth of Napster-
branded MP3 players, which compares unfavorably with the
close to $1bn in iPod sales Apple will show this year. So far, the
only real money is legal online music has come from these
devices.


What do analysts say about the future of music downloads and
rental services?


Well, Jupiter Research speculates that digital music sales will
reach $270m in 2004. By 2009, this market could hit $1.7bn.
Not bad, right?


Another firm, however, is less optimistic. The Diffusion Group
conducted a survey and found that only 4 percent of consumers
would commit to subscribing to a $9.95 per month music rental
service. Twenty-three percent of those surveyed indicated some
interest in such a service with the vasty majority saying they
were put off by the idea.


Renting music requires consumers to accept two new principles
- the most obvious being that their music collection will
disappear in an instant once a monthly payment is missed. The
other is that consumers must deal with DRM technology which
puts limits on what they can do with purchased tunes. With CDs,
you actually own what you pay for and can do what you like with
the product. Ah, the good old days.


So Roxio, er Napster, has turned itself into an experiment.

Posted by: tic swayback   Posted on: 08/10/04 You are currently: a Guest | Members login | Terms of Use

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