Napster v. iTunes: By the Numbers
Napster has released their competition to the iTunes Music Store. Their main thrust is an unlimited rental model: a service that lets you rent as many songs as you want for $14.95/month. But even Napster is hedging their bets; tucked away in the bottom of their Using Napster page is Napster Lite: a $0.99/track iTunes Music Store copycat service. So, in addition to looking at Napster and the iTunes Music Store generally, I'll also be comparing the rental model (used in Napster only) and the purchase model (used in both the iTunes Music Store and Napster).
All my calculations about my iTunes and iTunes Music Store usage and about projections of Napster's cost per track in comparison to the iTunes Music Store are in this downloadable Microsoft Excel file.
Napster doesn't support Mac OS X or iPod.
As this is a blog centering on Apple products, it's only logical that I start here. The lack of support for the iPod is probably Apple's fault. Napster could try to pull something like Real's Harmony, but they'd face the same problems of cat-and-mouse with Apple's updates. Not jumping into Mac OS X seems logical, as the Apple faithful are unlikely to turn in large numbers from the iTunes Music Store to Napster. But, nonetheless, Napster isn't for us Mac OS X users.
That aside, let's compare the two...
People get many tracks from CDs (and lingering illegal downloads).
My iTunes currently holds 3,903 tracks. While a few illegal downloads may still be floating around (believe it or not, I have actually been trying to get rid of them and replace them with legal copies), nearly all of those 3,903 tracks are from CDs. Only 162 of these are from the iTunes Music Store. A hole in the rental model might be that people who already have 3,500 songs don't want an additional 3,500, but rather want to supplement their existing collection with several hundred new songs, something which the purchase model is better for..
If you buy albums, you actually pay significantly less than $0.99/track at the iTunes Music Store.
The total cost of these 162 tracks from the iTunes Music Store is $129.55. Note that 162 x $0.99 doesn't equal $129.55; I bought only 28 tracks at $0.99/track. The other 134 songs I bought in albums of 11 or more tracks (plus one free download), meaning that I saved money versus the base price; the average cost of these 134 tracks was only $0.76/track, and the average cost of all the tracks I bought was $0.80/track. So if you buy lots of albums on the iTunes Music Store, you are probably not paying anywhere near the standard $0.99/track cost.
If you're not seeking to massively expand your collection, the purchase model is more cost efficient.
I first downloaded from the iTunes Music Store in October 2, 2003. So I've been using it for about 15 months, for an average of about $8.77/month. Spending on average $14.95 monthly over the course of a year in the iTunes Music Store, you could buy 181 tracks/year at $0.99/track, and even more if you purchase albums instead of single tracks (221 tracks/year at my $0.81/track average). If you're not massively expanding your music collection, the iTunes Music Store can be considerably cheaper than $14.95/month.
To figure out if the expansion of your music collection that could be provided by Napster is right for you (assuming you're OK with not having the tracks after your subscription ends), you just need to know if the average cost per track is more than the purchase model's $0.99/track (or less if you buy albums). Just use the formula:
Having thousands of songs is impractical.
Let's assume that the average song is 3 minutes long. Even with 3,903 songs, it would take me 11,709 minutes, or over 8 days, to listen to them all assuming I let them play around the clock the entire time. (Using the actual time of my songs rather than a 3-minute average, this would actually take almost 11 days.) If you were to listen non-stop for a whole week to 3-minute songs, you'd need 3,360 to not have to repeat. Realistically speaking, how many of us ever listen to 3,360 songs in a week? While there may be a few, the vast majority. So the advantage of having access to a million songs is not in the numbers you can store on your computer.
The unlimited rental model lets you switch songs as much as you like, keeping up with the newest stuff without having to purchase new music.
The people who would benefit most from Napster's rental model are those who always want the newest stuff. Whatever is hot, provided it's on Napster, would be there for no additional charge. On the other hand, for those who want their favorite music and aren't so concerned about being up to speed on the latest music trend, the purchase model probably better serves their needs.
Napster's unlimited rental model doesn't let you keep the music beyond your subscription.
With our president singing the praises of an ownership society, you gotta wonder if Napster's rental model is a little off the mark; the lack of ownership rights is the ultimate bummer of Napster. If you ever choose to drop your subscription, or can't afford it anymore, or if Napster goes bust, there goes all your favorite music. For the $129.55 or $8.64/month I've been paying for the past 15 months, I've got 162 tracks to show for it, even if I never look at the iTunes Music Store again, lose all my money tomorrow, or if the big bad commies bomb Cupertino and the iTunes Music Store right off the map. Had I been using Napster, I'd have nothing to show for the $224.25 I'd have spent so far. And looking at those long years in the table above, if you've ever thought about leaving behind a music collection for your kids - our MP4 files serving as our parents' records and 8-tracks - your offspring is either gonna be eternally tethered to a Napster subscription (which at some point will become more expensive then having had bought all the tracks in the purchase model) or else not get any of daddy's old MP4s at all.
You don't have to worry about losing files on Napster.
Passing on to your kids of course assumes the files survive the test of time. If that hard drive ever dies, you won't lose your music on Napster; you'll just lose the time it takes to download them all again. If those MP4 files disappear from your computer, Apple's not gonna give you a free replacement. As Apple knows what you downloaded, I find this policy stupid, but right now that's the way it is.
If Napster succeeds, Apple's gonna copy them.
As much as Apple bitches at Microsoft for this, I have no doubts that if Napster becomes a raging success, Apple will bring a rental model to the iTunes Music Store. This has the advantage of letting Napster test the waters to see if this model really works, with Apple being able to sit back and essentially get trial-by-fire market research at no risk to itself. Once it's tried and true, Apple can jump into the game using the huge head start it already has in the iTunes Music Store. That will bring the rental model to us Mac users and, even more importantly, to the iPod. This, perhaps, is Napster's biggest weakness.
All my calculations about my iTunes and iTunes Music Store usage and about projections of Napster's cost per track in comparison to the iTunes Music Store are in this downloadable Microsoft Excel file.
Napster doesn't support Mac OS X or iPod.
As this is a blog centering on Apple products, it's only logical that I start here. The lack of support for the iPod is probably Apple's fault. Napster could try to pull something like Real's Harmony, but they'd face the same problems of cat-and-mouse with Apple's updates. Not jumping into Mac OS X seems logical, as the Apple faithful are unlikely to turn in large numbers from the iTunes Music Store to Napster. But, nonetheless, Napster isn't for us Mac OS X users.
That aside, let's compare the two...
People get many tracks from CDs (and lingering illegal downloads).
My iTunes currently holds 3,903 tracks. While a few illegal downloads may still be floating around (believe it or not, I have actually been trying to get rid of them and replace them with legal copies), nearly all of those 3,903 tracks are from CDs. Only 162 of these are from the iTunes Music Store. A hole in the rental model might be that people who already have 3,500 songs don't want an additional 3,500, but rather want to supplement their existing collection with several hundred new songs, something which the purchase model is better for..
If you buy albums, you actually pay significantly less than $0.99/track at the iTunes Music Store.
The total cost of these 162 tracks from the iTunes Music Store is $129.55. Note that 162 x $0.99 doesn't equal $129.55; I bought only 28 tracks at $0.99/track. The other 134 songs I bought in albums of 11 or more tracks (plus one free download), meaning that I saved money versus the base price; the average cost of these 134 tracks was only $0.76/track, and the average cost of all the tracks I bought was $0.80/track. So if you buy lots of albums on the iTunes Music Store, you are probably not paying anywhere near the standard $0.99/track cost.
If you're not seeking to massively expand your collection, the purchase model is more cost efficient.
I first downloaded from the iTunes Music Store in October 2, 2003. So I've been using it for about 15 months, for an average of about $8.77/month. Spending on average $14.95 monthly over the course of a year in the iTunes Music Store, you could buy 181 tracks/year at $0.99/track, and even more if you purchase albums instead of single tracks (221 tracks/year at my $0.81/track average). If you're not massively expanding your music collection, the iTunes Music Store can be considerably cheaper than $14.95/month.
To figure out if the expansion of your music collection that could be provided by Napster is right for you (assuming you're OK with not having the tracks after your subscription ends), you just need to know if the average cost per track is more than the purchase model's $0.99/track (or less if you buy albums). Just use the formula:
(Number of Months Renting x $14.95) / Number of Additional Tracks = Napster's Average Cost Per Trackwhere Number of Additional Tracks is the number of tracks you will be adding to the music you listen to and Number of Months Renting is the time you'll be renting. If the the average cost per track is greater than $0.99/track, stick with the purchase model. If not, Napster's rental model works for you. The following table lists a number of benchmark numbers made using this formula, unrealistically assuming unchanging prices over the half century covered:
So it's clear that the more tracks you want, the more cost-effective Napster's rental model becomes. Even with the cowboy days of rampant free downloading, I'll wager that few people had 10,000 songs on their computer, but if you plan to add several thousand songs to your collection, the rental model is cheaper on a cost/track basis, again providing that you're not interested in having the songs beyond your subscription.
Number of additional tracks to which you want to listen Duration in which Napster's $14.95/month rental service will be cheaper than the iTunes Music Store on a cost/track basis 100 6 months 200 1 year, 1 month 300 1 year, 7 months 400 2 years, 2 months 500 2 years, 8 months 600 3 years, 3 months 700 3 years, 10 months 800 4 years, 4 months 900 4 years, 11 months 1,000 5 years, 5 months 2,000 10 years, 11 months 3,000 16 years, 5 months 4,000 21 years, 11 months 5,000 27 years, 5 months 6,000 32 years, 11 months 7,000 38 years, 5 months 8,000 43 years, 11 months 9,000 49 years, 4 months 10,000 54 years, 10 months
Having thousands of songs is impractical.
Let's assume that the average song is 3 minutes long. Even with 3,903 songs, it would take me 11,709 minutes, or over 8 days, to listen to them all assuming I let them play around the clock the entire time. (Using the actual time of my songs rather than a 3-minute average, this would actually take almost 11 days.) If you were to listen non-stop for a whole week to 3-minute songs, you'd need 3,360 to not have to repeat. Realistically speaking, how many of us ever listen to 3,360 songs in a week? While there may be a few, the vast majority. So the advantage of having access to a million songs is not in the numbers you can store on your computer.
The unlimited rental model lets you switch songs as much as you like, keeping up with the newest stuff without having to purchase new music.
The people who would benefit most from Napster's rental model are those who always want the newest stuff. Whatever is hot, provided it's on Napster, would be there for no additional charge. On the other hand, for those who want their favorite music and aren't so concerned about being up to speed on the latest music trend, the purchase model probably better serves their needs.
Napster's unlimited rental model doesn't let you keep the music beyond your subscription.
With our president singing the praises of an ownership society, you gotta wonder if Napster's rental model is a little off the mark; the lack of ownership rights is the ultimate bummer of Napster. If you ever choose to drop your subscription, or can't afford it anymore, or if Napster goes bust, there goes all your favorite music. For the $129.55 or $8.64/month I've been paying for the past 15 months, I've got 162 tracks to show for it, even if I never look at the iTunes Music Store again, lose all my money tomorrow, or if the big bad commies bomb Cupertino and the iTunes Music Store right off the map. Had I been using Napster, I'd have nothing to show for the $224.25 I'd have spent so far. And looking at those long years in the table above, if you've ever thought about leaving behind a music collection for your kids - our MP4 files serving as our parents' records and 8-tracks - your offspring is either gonna be eternally tethered to a Napster subscription (which at some point will become more expensive then having had bought all the tracks in the purchase model) or else not get any of daddy's old MP4s at all.
You don't have to worry about losing files on Napster.
Passing on to your kids of course assumes the files survive the test of time. If that hard drive ever dies, you won't lose your music on Napster; you'll just lose the time it takes to download them all again. If those MP4 files disappear from your computer, Apple's not gonna give you a free replacement. As Apple knows what you downloaded, I find this policy stupid, but right now that's the way it is.
If Napster succeeds, Apple's gonna copy them.
As much as Apple bitches at Microsoft for this, I have no doubts that if Napster becomes a raging success, Apple will bring a rental model to the iTunes Music Store. This has the advantage of letting Napster test the waters to see if this model really works, with Apple being able to sit back and essentially get trial-by-fire market research at no risk to itself. Once it's tried and true, Apple can jump into the game using the huge head start it already has in the iTunes Music Store. That will bring the rental model to us Mac users and, even more importantly, to the iPod. This, perhaps, is Napster's biggest weakness.
posted by Vincent at 7:29 PM
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