Caught Napping

Napster is still busy testing its forthcoming pay-for-swap service. As the beleaguered file-sharing service tinkers with the new offering, the service outages won’t likely do the company much good. Even before Napster began reworking its technology–and business model (“We’re still fine tuning our filters,” reads a message on the Napster Web site)–the one time iconoclast of the digital music revolution had already began losing its once loyal following. Online music swappers can be fickle indeed when the word “free” is eliminated from a Net service.

According to Milpitas, Calif.-based Nielsen NetRatings, in the eight weeks leading up to July 15, Napster retained its top spot among file-sharing sites, but lost about 1.5 million at-home unique users, a 36 percent decline, following the court ordered injunction. In addition, remaining free file-sharing services, such as KaZaA and BearShare, have seen huge increases in their user bases. KaZaA’s at-home user base spiked 142 percent in the period between the week of June 3 and the week ending July 15. (This file-share site didn’t register enough unique users to appear on the data charts prior to June 3.)

Adding to Napster’s legal woes is a new Jupiter Media Metrix report stating that at-home users’ total time spent on the company’s services dropped 65 percent between February and June in fourteen leading wired countries, including the United States.

Of course this is all in the past. When it’s finished with tweaking its filters, Napster could bounce back with its subscription service. It will, however, be entering a file-sharing landscape that’s been transformed by on-going litigation, users and recording labels’ increased tech savvy and the arrival of even more competition.

But Napster–and its file-sharing brethren–can take heart. New data suggests that when it comes to paying for these music-swapping services, if companies build them, music fans will come to download. New York-based JMM found in a consumer survey that 59 percent of online music buyers were interested in pay subscription services in June 2001–up from 41 percent in June 2000. –Sid Ross

DATA POINTS:
–Thirty-eight percent of consumers polled in June 2001 said that the feature they would most be willing to pay for in a digital music subscription service was the guarantee of the music file’s sound quality, meaning CD quality or better. Next was guaranteed virus-free music files (33 percent) followed by a high-speed transfer connection (32 percent), both guaranteed.

–Forty-eight percent of users polled said that their “most wanted” digital music subscription service feature was the ability to make copies of downloaded songs. The ability to listen to songs on any device was at 36 percent and a highly personalized online radio came in at 30 percent.