Is there a mobile aspect to this new $5 streaming tier?  Any Napster Mobile app for these new smartphones with app stores?
Not at this time, other than the sideloading of MP3s. We are constantly evaluating different access points for the consumer. There are certainly some opportunities and challenges there. There are definitely some interesting platforms emerging on the mobile side that give companies like us a lot more flexibility in being able to bring some of these services to these devices.
What’s the marketing behind this going to be?
To bring this offer to a mass market audience, this is where we think we’re well positioned with Best Buy and its touch points. You’ll see us over the next weeks and months leveraging first and foremost the Best Buy stores themselves by offering prepaid card versions of this. They range from a $5 card to $15, $30 and $60 good for one, three six and twelve months, respectively. For the consumer, if you by say a $30 card, you get all 30 of those MP3s on day one, and the full 6-month period to use it.
Other than cards hanging on a wall, is there any other integration?
Absolutely. We’re going to be leveraging a lot of different areas of the store for merchandising and signage. Everything from the music section--with a “Can’t find what you’re looking for? Go to the online catalog with over 7 million tracks on demand” [sign]--to the likely suspects like MP3 players, PCs, home theaters, IP TVs. All those devices present opportunities for bundling. I think you’ll see Napster start to show up on the Sunday circular and on bestbuy.com. And most importantly when you talk about customer touchpoints, is just training the blueshirts in the stores. When you look at a $15 iTunes card and a $15 Napster card, they can very clearly articulate a simple message to the consumer and let the consumer choose.
Is the value message really the one you want to lead with?
Value is one element of it. There are others. One is the interoperability and compatibility of MP3. There are still consumers still unaware of that. And there’s this unlimited on-demand streaming thing you might not have tried in the past—whether it was a price barrier or an awareness barrier. So you have this opportunity to explore this music universe and make sure you want to buy it and know it will work on the stuff you already have.
How important was the move to DRM-free and adding the monthly free songs? Were those elements necessary to make that message more consumable?
It wasn’t any one thing, but a combination of things, and the maturation of the market as well. The interoperability and the discovery at the cost of a latte a month. The cost of participation now is dramatically lower.
You’re also competing with ad-supported streaming services. Is the inclusion of downloadable songs essential to your ability to compete with them?
I go back to the overall message of the hybrid offering. It’s really the best of both worlds. The value consumers will ascribe to this kind of hybrid offering today I’d say is more MP3-value based. I think as more and more IP-connected devices come into the market at lower prices, the value of on-demand streaming will increase and consumers will ascribe more value to that over time. It’s going to take some time, but that’s the way I view the value model shifting over time.
Regarding the in-home angle, how important is it to have Best Buy employees selling Napster alongside connected devices? Is it easier than trying to strike deals to get access to Napster bundled with those devices?
It really positions Napster in Best Buy in a unique way that will be difficult for others to replicate. When you look at the number of devices that flow through the Best Buy channel and the market share they have, combining an integrated service with consumer electronics devices is going to be I think one of the growth drivers of the business. IP TVs are just starting to roll out this year, so clearly there’s going to be a lifecycle adoption curve. But a lot of this is just about introducing this to consumers.
Any coincidence to introducing this new service around the time of the 10th anniversary of the Napster brand?
Fortuitously, it worked out very well. It’s kind of hard to forecast these things. But it does coincide nicely.
What do you feel is the significance of the anniversary to the company now?
You look back at the last 10 years… in some respects digital music has come so far. But in other respects MP3s just broke last year in a broad way. So in some areas we’ve come a long way, but in others there’s been slow but steady progress. We’re still 10 years into a 20-year evolution. CDs aren’t going away overnight, but they’re going to go away pretty quickly. There’s been some companies with a lot of buzz around ad-supported free, like Spiralfrog, and 18 months later they’re out of the game. A lot of big companies like that have tried the digital music thing—like AOL, Yahoo, MTV, Virgin—have stepped out of the market. This is another step towards the perfect music experience, but it’s a great next step for the industry.
But how is this a Napster anniversary? After all, what Napster was then and what it is now are two totally different things.
The vision for Napster has really remained unchanged. Yes, there was the illegal P2P part of it, but the vision of giving consumers access to any song that’s ever been recorded and have instant access to that, we’re making noticeable progress towards that vision. The vision has remained intact, and that’s what we’re doing.
Did acquiring the Napster name and applying it to your service have the effect you were hoping for?
When we look at our brand awareness overall, it’s tremendous. Yes, there are some negative and positive connotations to that brand, but the overall awareness is huge. Overall, it’s been a benefit for the company to take that Napster brand, and again, navigating that vision that has remained the same.