Napster Gives It Away

It wasn't that long ago that Napster was known for being a renegade, a place to hoist the virtual Jolly Roger and pirate music with wild abandon. Now, Napster, which has since gone legit through parent Roxio (Nasdaq: ROXI  ) , said it plans to give stuff away for free again. This time, it'll offer up free MP3 players for use with downloaded music from its service for new subscribers.

This time there's no pirating involved; somebody's going to pay, and one might imagine quite a hit to Roxio's wallet to run such a promotion. It will give away the MP3 players, a $130 value, in exchange for signing for a year's service, a $120 subscription price.

Obviously, Napster's got it bad. Online music's becoming a mosh pit of heavyweight rivalry, from all sides and all walks of corporate life. Apple (Nasdaq: AAPL  ) has done outrageously well with its iPod and iPod Mini, which are anything but free -- in fact, many experts mocked them as too expensive from the get-go. Further, its iTunes site, boosted by promotional deals with PepsiCo (NYSE: PEP  ) , has also been wildly popular.

Who else threatens Napster? Sony (NYSE: SNE  ) , Britain's OD2, Time Warner's (NYSE: TWX  ) America Online, even Wal-Mart (NYSE: WMT  ) are good examples. And, holy cow, one day you may even be able to throw Amazon.com (Nasdaq: AMZN  ) and Yahoo! (Nasdaq: YHOO  ) into the fray, as Fool contributor Mark Mahorney recently reminded us. (Incidentally, Mahorney also gave us a review of his own music-downloading experiences, speaking of the state of the fledgling industry.)

Judging by the iPod's success, people are paying up for what they perceive as quality, trendiness, and style. It makes me question the wisdom of Roxio's promotion, which seems a desperate move to grab some market share from its big, bad rivals. While a free MP3 player may attract some bargain shoppers who are dipping their toes into digital downloads, whether music junkies will want to pay the $120 lump sum to commit for an entire year is another question.

After all, the a la carte option that Apple and Sony both adhere to has been working well with consumers. And it's my guess the musical public might not want to commit to Napster with the varying choices around.

Given all the competition as well as the continuing evolution of the industry and increasing consumer adoption, it's hard to pick any winners. However, I have particular doubts about Roxio and its Napster. While Napster did revolutionize the music industry by giving away music for free, this most recent move seems more desperate than daring; its freewheeling days are likely over.

Do you love music, no matter what the medium? Talk to other Fools on the Music and Musicians discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.


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