Will the subscription model beat out iTunes?

Slashdot has an article on Napster's buisiness model compared to iTunes. I decided to expand my +5 post into a blog post.

The "new" Napster - which shares nothing in common with the old Napster P2P service but the name - uses a subscription model. You get "all you can download" for $15 a month, but only as long as you continue your subscription. Once you cancel, all your music goes bye-bye. With iTunes, you pay 99 cents a song, but you get to keep it. Napster's DRM (Digital Rights Managment, the stuff that prevents you from "pirating" your music - which also prevents you from using it how you want) is also very restrictive compared to iTunes - and it doesn't work with the most popular MP3 player out their, a little music player called the iPod. The Napster CEO, in fact, called iPod owners "stupid" - probably not a good way to attract the early adopters your business needs.

The Napster CEO says that the Napster model is closer to the P2P experience than iTunes. True, you can download as much as you want in Napster - but you have to pay for it, and you can't do what you want with it. That, of course, is why people use P2P - because it's free and you can do what you want with the music. Take those two things away, and all you are left with is the Napster name and the cat-with-headphones logo.

I haven't tried out the new Napster, but I have tried out another service built around the same "all you can download, but you can't keep it" model - a service called CDigix. I got to use it because the college I work for has recently signed a deal with them that gives all our undergrad students free access to the subscription. It's OK, but I doubt I would use it if I had to pay for it. They do have a fair amount of music, the quality seems decent (at least from the crappy internal speakers in my office machine), and downloads are very fast. However, I've got my complaints. The interface design is pretty bad, it has a habit of kicking you out or not letting you in at random times, it only works in Internet Explorer on Windows, and like Napster, the music is DRM'ed WMA's (Windows Media Player format) and doesn't work with an iPod. Also, there is a lot of music they don't have. I can understand not having an entire album by an artist, but there are artists where they have every song except the hit one. For example, they have multiple Sir-Mix-a-Lot albums, including the one that Baby Got Back is on - but not Baby Got Back. They have the Lucas album Lucascentric, but not the one "hit" off the album, "Lucas With the Lid Off".

There is one thing that may allow CDigix to suceed where Napster might not. CDigix gets most of it's customers from colleges, who pay directly. That means they don't need to attract their actual end-users, the students, but rather colleges.

I think that the large installed base of the iPod/iTunes, combined with the fact that there are a ton of P2P services that still exist (eMule, WinMX, Bittorrent, Kaazza) will make it difficult for Napster to succeed. Those who want lots of music will continue stealing from P2P (including your truly) while the rest will use iTunes (as well as buying and ripping CD's). Napster may get a few users based on name, but most users aren't used to the idea of paying for music, but not getting to keep it or use it how they want.