- The Washington Times - Tuesday, October 28, 2003

Napster ignited a digital music revolution with its popular — but illegal — file-sharing service before the record companies shut it down two years ago.

Today it springs back to life. Once again, consumers can download music from Napster’s Web site.

Now they have to pay for it.

“For years music fans have been asking for a compelling and legal online music service that gives them the ability to share and discover music,” Napster President Michael Bebel said.

Napster says it has 500,000 songs in its library. Consumers can download them for 99 cents each or $9.95 an album. Consumers can also pay a subscription fee of $9.95 a month to download an unlimited number of songs. The company said this week it will sell prepaid cards for $14.95 each in thousands of retail outlets beginning next month. The cards will allow people to download 15 songs from the new music service.

For now, Napster will only be available to U.S. consumers, though the company plans to make the service available worldwide.

“Their prospects for success are pretty good,” said Michael Goodman, senior analyst for technology research firm Yankee Group.

Legitimate digital music services are gaining momentum at a glacial pace while the record labels continue their legal onslaught against peer-to-peer networks, like Kazaa, and the people who use them to swap song files.

But with its corporate transformation complete, Napster is ready to try its hand as a pay-for-play service.

The new Napster bears little resemblance to the one embraced by college students and vilified by the record industry. Only the trademark kitten logo remains the same.

Shawn Fanning started Napster in 1999. The Recording Industry Association of America shut it down through the courts in 2001. Napster attracted an estimated 70 million users by the time it shut down.

“I think the best thing Napster has going for it is brand recognition,” Mr. Goodman said.

Roxio Inc., a California-based company that makes CD- and DVD-burning software, bought the Napster name last year for $5 million.

Roxio also purchased digital music subscription service Pressplay from Sony Music Entertainment Inc. and Vivendi Universal SA’s Universal Music Group.

Napster is stepping into a small but increasingly crowded market of digital music services.

“There is a fair amount of competition, and that’s probably good for consumers,” said Dennis Mudd, chief executive of Musicmatch.com, which sells music downloads and markets a streaming music service.

Like Napster, Emusic.com and Listen.com market subscription services, which give users unlimited downloads for a monthly fee.

Napster also will sell songs to people who choose not to buy subscriptions, a model embraced by Musicmatch.com, Buymusic.com and Apple’s ITunes.

“I like the Napster approach. I think it’s got some potential,” said David Card, an analyst with Jupiter Research.

Napster can boast the biggest selection of songs. ITunes has the second-largest selection with 400,000, while Listen.com’s Rhapsody service has about 390,000. Buymusic.com and Musicmatch.com have about 300,000 songs each.

In addition to fiercely competing with one another, pay-for-play music sites still face stiff competition from peer-to-peer file-sharing services such as Kazaa.

More than 230 million people have downloaded Kazaa’s software, and Kazaa says it has 5 million users at any one time. Last year the record companies sued Sharman Networks Ltd., which owns Kazaa.

“That is still the most popular form of downloads, and it will be for the next few years,” Mr. Goodman said.

Consumers have indicated a willingness to buy music online. Apple’s ITunes has sold 14 million songs since starting the service in April.

A survey by Jupiter Research in July found that just 10 percent of adults would download songs for 99 cents each.

Jupiter Research estimates sales of digital music will grow from $80 million this year to $1.6 billion in 2008.

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