Napster (pay service)

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This article is about the company formerly known as Roxio. For the original Napster filesharing service, see Napster.

Napster, LLC

Type	Public (NASDAQ: NAPS)
Founded	Reconfigured by Roxio in (2003)
Headquarters	Los Angeles, California, USA
Key people	William Christopher Gorog, Chairman & CEO
Industry	Online Music
Products	Napster Light Napster Members N2G (Napster to Go)
Revenue	$94.691 million USD (2005)
Net income	$54.945 million USD (2005)
Employees	145 (2006)
Website	www.napster.com

Napster, LLC (NASDAQ: NAPS, formerly Roxio, Inc.) is an online music provider offering a variety of purchase and subscription models. Their a la carte sales have been modest compared to their most significant competitor (Apple Inc.'s iTunes Store). The company's name and logo are derived from the infamously free Napster peer-to-peer file trading service, which was shut down after a series of legal actions taken by the RIAA. The brand name was later purchased by Roxio, to capitalize on the notoriety and popularity of the former service.

1 History
2 Introduction
3 New focus
4 Napster Services
5 Security Issues
6 Success
7 Management
8 Expansion
9 Acquisition
10 Sources
11 See also
12 External links

[edit] History

Roxio bought the assets of the original Napster company at its bankruptcy auction in 2002 and the online music service called pressplay in 2003, with the intention of using these assets as the basis of a new legal online music service that would let users access music through a subscription or on a fee-per-song basis—and thus giving the record companies and the artists/composers (or their estates) the royalties they had been asking for as iTunes does. This service was confusingly dubbed "Napster 2.0", despite the fact that the original Napster Inc.'s now-dead version of Napster p2p had actually been at version 2.0 for some years. It had a beta release in New York City on October 9, 2003, and went into full production on October 29. Napster 2.0 is not a peer-to-peer service, but besides the name and logo this new version does contain some features (such as artist, album and song search) similar to those of the original Napster. It was the second legal music download service to gain widespread popularity, launched six months after the iTunes Store.

The Napster PC-based subscription service is currently available in the U.S., UK, Canada, Germany and Japan.

[edit] Introduction

Viewing Music on Napster

On October 27, 2003, just 48 hours prior to the official launch of Napster 2.0, Napster posted a press release on their website stating that starting in November, people can buy Napster gift cards for $14.85 from Safeway, Rite Aid, CompUSA, Best Buy, and ExxonMobil. This card will have a scratch-off surface that will reveal a unique PIN that can be used with Napster 2.0 to give 15 credits for permanent download of music from the Napster 2.0 service. In another press release Microsoft announced that its new Windows XP Media Center Edition 2004 will feature the Napster 2.0 service. Earlier in October, Napster and Samsung revealed the first Samsung Napster Player, which is currently available at electronic stores throughout the U.S. The press release also claims that Napster 2.0 supports all the leading digital music players currently released on the market, though it does not support the popular Apple iPod. One of the company's first major moves involved a deal with Pennsylvania State University, which started using Napster to provide its students with a legal alternative to illegal file sharing of music.^[1]

On February 23, 2004, Roxio announced that Napster 2.0 had sold 5 million tracks since its launch in October, 2003, and attracted roughly 1.5 million customers. However, at this point the number sold was still far behind Apple Computer's iTunes Store, which by January 6, 2004 had sold over 30 million tracks. Analysts were further concerned when it came to light around February 23 that the Hewlett Packard (HP)-Apple deal to bundle iTunes with all new HP PCs in return for an HP-branded iPod had originally been Napster's deal, which was cancelled a few days before Napster 2.0's October 29 launch.

On May 20, 2004, Napster announced that it had set up a British service ahead of iTunes to compete with the British legal download market leader OD2 co-owned by Peter Gabriel. There was some concern by British consumer groups about the higher cost charged in the UK which the company attributed to higher record company wholesale costs and the British VAT.

On May 26, 2004, Napster announced the launch of Napster Canada, Canada's first on-demand music subscription service.

On August 9, 2004, Roxio announced that Sonic Solutions would acquire the consumer software division of Roxio for a total purchase price of $80 million.

On January 3, 2005, Napster began trading on Nasdaq under the new ticker "NAPS".

On February 3, 2005, Napster announced the launch of Napster To Go, the world's first digital music portable subscription service. The release was accompanied by a major $30 million marketing campaign supported by strategic alliances with leading consumer electronics manufacturers Creative, Dell and iriver. The launch was supported by a fully-integrated marketing program, led by a February 6, 2005 Super Bowl television advertisement.

On July 27, 2005, Napster announced a long-term, strategic partnership with XM Satellite Radio and the intention to launch "XM + Napster," a single interface for accessing, purchasing, and managing music from XM and Napster.

On December 9, 2005, Napster announced the launch of Napster Germany, that country's first flat-rate digital music service.

On January 18, 2006, Napster announced that the number of premium paid subscribers enjoying its award-winning digital music subscription services surpassed 500,000.

On February 13, 2006, Napster and partner Ericsson announced the availability of the Napster Mobile mobile music service to wireless carriers across select markets in Europe, North America and Asia. The two companies simultaneously announced that SunCom Wireless in the U.S. was the first to agree to offer the Napster Mobile service to its subscribers.

On May 12, 2006, Napster unveiled the new Napster.com, an interactive, ad-supported, free online music destination. The company also introduced NapsterLinks, URLs that link to specific songs, albums or artists in the Napster.com catalog that can be embedded in e-mails, instant messages, blogs and other Web sites.

On June 27, 2006, Napster announced the immediate availability of Napster 3.7, an updated version of its PC application featuring PowerSync, an optimized sync engine developed in-house which optimized the process of transferring subscription music content to compatible MP3 players.

On September 18, 2006, Napster announced that it had retained UBS Investment Bank to assist the Board and management in its evaluation of strategic alternatives.

[edit] New focus

On August 9, 2004 Roxio announced the sale of their Consumer Software division (Roxio's core business prior to their acquisition of pressplay) to Sonic Solutions, for $80 million in equity. The transaction was completed on December 17th. The company then rebranded itself Napster, Inc., and shifted their focus entirely to their music efforts.

Napster

Napster 3.7
Developer:	Napster, LLC.
Latest release:	3.7.2.6 / July 2006
OS:	Microsoft Windows XP
Use:	Media player
License:	WMA
Website:	Napster.com

[edit] Napster Services

Napster is primarily a subscription service with two main offerings.

Napster, the basic subscription tier, offers unlimited listening and PC downloading on up to three computers for $9.95 per month.

For $14.95, music fans can subscribe to Napster To Go, the company's portable subscription tier, and enjoy unlimited transfer of music to their choice of compatible MP3 players, cell phones and PDAs in addition to unlimited streaming and PC downloading.

Napster also offers Napster Light, a pay-per-track store that does not require a monthly subscription fee.

All Napster subscribers enjoy a wide variety of advanced community, personalization and music programming features.

In May of 2006, Napster launched Napster.com, a free, advertising-supported Web experience which enables music fans to stream full-length versions of all the songs in Napster's catalog of over 3 million tracks three times each, without downloading any software or making any service commitment. The company simultaneously launched NapsterLinks, links to all of the music in Napster's catalog that can be embedded into Web pages, blogs, wiki pages or emails to share free music anywhere on the Web.

Napster also offers a mobile music service, Napster Mobile, which enables users to search and browse Napster’s music catalog and preview, purchase and play songs on their mobile handset through an integrated music player. Napster Mobile is a fully-integrated, dual-delivery service available to wireless operators across the globe.

[edit] Security Issues

Windows Media digital rights management, on which the Napster subscription service is based, has a recently exposed flaw^[2] that allows the digital rights management element to be removed from Windows Media files. The exploitation of this flaw allows unlimited use and distribution of files downloaded through the Napster subscription service.

[edit] Success

In January 2007 Napster announced that the company had served 1.2 billion downloads and streams in calendar 2006, with 500 million songs downloaded and more than 700 million music streams.

For the fiscal third quarter 2007 ending December 31, 2006, the company reported 566,000 subscribers^[3], including university and Japanese subscribers, which compares favorably to its closest competitor Rhapsody's 545,000^[4]. Their penetration into higher education through discounted pilot programs has, while controversial^[5], grown steadily^[6]. The company has not given any indication about when it expects to reach profitability to date.

In January 2006, Napster laid off around 10 employees from a staff of 153^[7], causing some to question the viability of the company. In response, Napster claimed that no further layoffs would take place and cited a doubling of revenue for the last quarter of 2005 from the year before.

[edit] Management

Chris Gorog - Chairman and CEO
William E. Pence Ph.D. - Senior Vice President and Chief Technology Officer
Bradford D. Duea - President
Laura B. Goldberg - Chief Operating Officer
Nand Gangwani - Chief Financial Officer

[edit] Expansion

Napster since inception has increased the size of the company by expanding to other countries. The success so far has been mixed with a significant amount of growth in the number of subscribers that are located in the Non-US Outlets. These countries include so far:
Napster Canada
Napster UK
Napster Japan
Napster Germany

[edit] Acquisition

On September 18, 2006, Napster announced that it had hired UBS Investment Bank to find a major strategic partner or to be acquired completely^[8]^[9].