iTunes vs. Napster

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I signed up for a free two-week trial of Napster recently, and my trial has just ended. I decided not to continue with the service, but I was intrigued by many of the comments I read in the Napster message boards while I was there. It seems that the two main arguments of those who support Napster are that iTunes users are stupid, and that Apple doesn’t offer choice like Napster does.

I wish I was kidding about the “stupid” part, but over and over I saw messages from people claiming that it would take an especially stupid person to buy an iPod, since you’d have to spend $10,000 to fill it up. They seem to be parroting the expensive marketing campaign; Napster’s CEO said prior to its launch that, “We’re going to be communicating to people that it’s stupid to buy an iPod.” What sort of service hopes to succeed in the market by calling their potential customers stupid? Anyway, $10,000. I’m pretty sure I’ve spent that much on music in my life, but I think I’m an exception. And yet iPods are flying off the shelves! How on earth are all of these people able to afford the $10,000 it takes to fill up an iPod?

The answer is that the iPod doesn’t just accept FairPlay-encoded AAC files, but can also store and play un-encrypted AAC files as well as MP3 files, so everybody can rip and transfer their entire existing CD collection before ever buying a single track from the iTunes Music Store. For that matter, people can load their iPods up with tracks they’ve pirated, or created themselves, or downloaded for free (Apple offers four free tracks per week, and many bands have free tracks available on their websites). I won’t say that nobody is buying 10,000 tracks from the iTMS, since I remember Apple reporting one person had bought twice that many, but most people have an existing music collection.

Which leaves choice. But what do they mean by choice? The general argument seems to be that an iPod limits you to the iTunes Music Store, and the iTunes Music Store limits you to the iPod. With Napster, however, you can use one of several different portable players from several different manufacturers, and with one of those players you can use music from Napster, or Wal-mart, or some other source. That sounds pretty good, right?

But choice is really more elusive than that. There is a choice of formats: While MP3 is the standard, online stores with major-label material are offering one of three protected formats: FairPlay-encoded AAC (from Apple), encrypted WMA (from Microsoft), or ATRAC (from Sony).

There is also choice in hardware, but it is closely related to the choice in formats. Nobody’s players but Sony’s plays ATRAC songs, and nobody’s players but Apple’s play FairPlay songs, and nobody’s players but Microsoft’s play WMA songs. Well, several different hardware manufacturers sell products licensed by Microsoft, and HP and Motorola sells products licensed by Apple, but those are generally the three choices: Sony, Apple, or Microsoft.

Although a very minor point, there is also choice in software, and there just might be three people in the world to whom this really matters. I don’t know what programs support Sony’s ATRAC, but the only programs I know of that support Apple’s FairPlay are iTunes (for Mac and Windows) and VLC (with a little tweaking on non-Mac platforms, such as Linux). Microsoft’s WMA can be played with many different Windows applications, but apparently only on Windows. There is another factor in software choice, too. You can buy WMA tracks using several different software clients, each one tied to a specific vendor. Use the Napster client to buy tracks from Napster, iTunes to buy tracks from Apple, and so on. While it might at first seem like an advantage to be able to buy WMA music from more than one vendor, service restrictions tend to make that difficult, so it isn’t as much an advantage as it first appears.

There is also a choice of content. Some artists, labels, and even albums or songs are only available on one service. In my two-week trial, I didn’t find any artists that were available on Napster but not iTunes, but I did see a few “Napster exclusive” recordings, mostly live. There are also plenty of “iTunes exclusive” tracks, but unless you’ve got an extra-special hankering for one particular artist for whom you can’t find CDs as an alternative, this doesn’t seem to be much of an issue.

The biggest choice, from what I can see, is one of business model. Napster has bet everything on the idea that people want to rent music instead of buying it, while Apple stubbornly insists that people really want to own their music. There is actually a “Napster Light” service which essentially mirrors the ownership model of iTunes, the marketing for Napster focuses on the rental service. And really, since iTunes has the market locked up right now, a service is going to have to do something different to make a dent!

Head To Head
With iTunes, you pay nothing for the software, which happens to have been a popular music library program before the introduction of the iTunes Music Store. Using the iTunes software, you can browse and search and listen to 30-second samples of any song. If you want a full song, you pay 99 cents to download it and then it is yours. You can transfer it to your iPod, burn it to a CD, or share it with other computers on your home network. There are some limitations, but they are designed to affect very few people. In any case, since you can burn every track to CD and the re-import the tracks as MP3s or unprotected AAC or whatever you wish, you have real ownership of the track.

With Napster, you also pay nothing for the software, which was designed from the ground up to look and feel similar to the old Napster software, but has a few odd bugs in its “Library” section yet. They will undoubtedly be fixed soon, but they annoyed me last week. Using Napster Light, you can browse and search and listen to 30-second samples, just as with iTunes, and download a track for 99 cents for burning, just as with iTunes. The restrictions are actually a bit more restrictive, but since you can burn the track to CD, the difference doesn’t really matter.

Napster Light is so like the iTunes Music Store that it is hard to imagine someone choosing to use it on any basis other than a hardware choice. Everything Napster Light does, the iTMS does better, and the iTMS provides four free tracks every week and better organization and Audible audiobooks and Pepsi bottle promotions.

But then there is the Napster service, which is different. If you pay $9.95 every month, you can download most tracks and play them on your computer for no extra charge. You can’t burn them, but you can listen to full-length songs. If you want to put them on a WMA10-compatible portable player it will cost you an extra $5 per month, and if you want to burn them to CD, it will still cost you 99 cents per track. Also, there are still some artists, some albums, and even some songs that cannot be downloaded unless you pay the 99 cents. I noticed quite a few albums in which a single song was “Buy Only,” which would drive a complete-album freak like me pretty crazy, but I think I’m an exception in that sense. Most tracks are included in the $9.95 monthly, with the exceptions running pretty heavy in the Christian music and other sub-genres.

Listening to full-length tracks is a big advantage of Napster over iTunes, and since you get to choose the tracks, it may even be a better deal than satellite radio, which for the same price gives you lots of channels, but none you can control song-by-song. Or, since you have to choose the tracks, it may not be as good a deal as satellite radio, which for the same price gives you lots of channels which you don’t have to think about to listen to. Its all in how you look at it, I suppose.

Still, $9.95 a month to download as many songs as you want sounds like a good plan, a killer feature. So why not Napster? Because the music is rented.

What happens if you ever decide to quit paying $9.95 a month? All of the music quits working. If you’ve been a faithful customer for a year, paid $119.40 for twelve months of service, and then cancel, you end up with nothing. Just as with satellite radio, you’re paying for the right to listen, and no more. Napster, the RIAA, and Microsoft control the music.

For example, it recently came to light that Winamp, one of the pieces of software that plays protected WMA music, had a plugin called OutputStacker which would allow users to “stack” a DiskWriter plugin and convert protected WMA songs to another format, like WAV (for burning to CD) or MP3. There were several limitations, but it could be done. However, since protected WMA music is rented, not sold, they were able to solve the problem by expiring Winamp’s WMA certificate. The next time Winamp checked its certificate on the server, it was told it was expired, and it refused to play protected WMA songs. The only solution was to upgrade to a newer version of Winamp, which coincidentally contained code to disallow the use of OutputStacker and DiskWriter. If you didn’t want to upgrade Winamp, you wouldn’t be able to listen to protected WMA tracks with it. Cleverly done, I think, but a reminder that the music is rented, never sold.

My goal, when listening to music, is to own it in an unencumbered format. When I get tracks from the iTunes Music Store, I burn them to CD and then rip them back as MP3. That’s just the kind of person I am. So Napster’s service wasn’t very appealing to me, since I would still have to pay 99 cents per track to be able to burn the songs to CD. Paying $9.95 on top of that seemed of little value to me because I already have quite a large collection of music ripped from CDs I own, and can easily create a radio station of my own for free.

Also, I was frustrated by the inconsistency of the Napster experience. There often seemed to be no rhyme or reason about which songs were included for the $9.95 monthly fee. On a ten-song album, nine would be rentable, and one required an extra purchase. Or for a given artist, three albums would be buy-only, but a fourth could be rented. I realize that this isn’t Napster’s fault, but is the choice of the labels and artists, but it still drove me batty. I believe that there is value in consistency, and while Napster takes a step closer to the iTunes ideal, in that all songs can be downloaded for burning for 99 cents (unlike earlier rental models which placed restrictions even on that), it still seems uneven by comparison. Technically, there are “Album Only” tracks in the iTMS, but they all seem to be over seven minutes long, and are hard to find outside of classical choices.

Online music seems to be about the illusion of freedom, and Apple has so far managed to make that illusion seem complete, while Napster continually reminds users that they are not free, and that everything that they do is by the good graces of the labels. Perhaps that doesn’t matter to you, but it turned out to matter to me. For the most part, I’ll stick with MP3.

One More Thing
One thought struck me as I was considering whether to let the trial convert to the paid service. The RIAA has been claiming that music piracy costs them billions of dollars, right? They’ve sued individuals for thousands of dollars. But since they’re willing to accept a percentage of $119.40 per year from Napster for “unlimited” music, then clearly RIAA losses can never exceed a percentage of $119.40 per year per person, right? The RIAA argues that users who engage in music piracy would otherwise have paid cash for the CDs containing all the songs they download, but a user could as easily counter-argue that they would otherwise sign up with Napster to get access to all of the same music. The reasoning behind both arguments is flawed, since most people would do neither.

Therefore, counting the RIAA losses to piracy should be easy. Estimate the number of people engaging in music piracy, estimate the percentage of that $9.95 per month that the RIAA gets, and multiply. I bet it falls considerably short of billions of dollars.

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About pwinn


    “The reasoning behind both arguments is flawed, since most people would do neither.”

    Got it in one. Great post, thanks.

  • StandardAI

    That’s pretty stupid to say that only Apple has the rights to AAC.

  • I suspect I’m a fairly typical iPod owner: I heard iTunes was super easy to use and free. As soon as I got a decent computer with lots of storage space, I set up iTunes and spent several days ripping the hundreds of CDs that I owned. It was easy and the ability to kick back or work while rolling through thousands of songs on shuffle mode was bliss. I’ve since added a bunch of songs that I bought from the iTunes store alongside a track or two that I obtained via “other means.” Add in the iPod, and I can walk/exercise/drive with whatever I want, whatever I want it (including feeding podcasts).

    So am I stupid? Maybe I am. But I’m pretty happy about it.

  • RJ

    I’m still in the Dark Age. No iPod here!

    But I do use…uh…”other sources” to find songs I like online. For free, to boot!

    Then I can listen to them on my computer, or burn them to a CD.

    Works for me!

  • Phil–great article. No question that Napster is Apple’s bitch, and will be as long as you are a slave to Napster vis a vis the rental format. One question–when you download from iTunes (something I’ve yet to do) do you have a choice of format, or is it automatically AAC? If its only AAC–do most burning software apps recognize that as a burnable format? Why can’t you just rip it from AAC to MP3 without burning to a CD? Thanks

    Eric B–You just described my iPod experience to a T, except for buying from iTunes, Haven’t done that yet. I guess I am stupid, and loving it!

  • iTunes is better than Napster, but it’s many notches below Windows Media Player, at least as a media player – not as a store. Store-wise, it is fine.

    One of the main reasons I prefer Windows Media Player is the fact that I can play and catalog multiple media types – music, video, etc. iTunes doesn’t do that – yet. Also, I find more support for the media formats used on my players and media sources.

  • Matt, as far as I know, you can only burn FairPlay-encoded AAC files from within iTunes itself. iTunes makes it pretty easy to burn a CD, but the “convert to MP3” menu item that is available for non-protected AAC files (and AIFF files, and others) is grayed out with a FairPlay-protected song. There is probably a way to hack things, but I try to stick with relatively mainstream methods for things.

    Aaman, WMP doesn’t run on my Mac, or rather I should say that the WMP on my Mac doesn’t have any of the features you describe. Since I run iTunes there, I find it pretty easy to run iTunes on my windows box, too. I used to run Winamp and Macamp to accomplish much the same thing.

    I tend to use VLC to play video, which handles things even WMP chokes on — which are pretty rare, I’ll grant.

  • “One question–when you download from iTunes (something I’ve yet to do) do you have a choice of format, or is it automatically AAC?”

    Automagically AAC format.

    “If its only AAC–do most burning software apps recognize that as a burnable format?”

    Hmmm….good question….I’ve only ever used iTunes for my burns so I have no idea.

    “Why can’t you just rip it from AAC to MP3 without burning to a CD?”

    Apple imposed limitation.

    BTW, great article detailing the differences.

  • Oh yes, sorry, I should have answered the first part. It’s not only always AAC, it’s always 128kbps FairPlay-encoded AAC.

    Napster, to be even-handed, is always 128kbps Whatever-encoded WMA.

    There are websites that exist in the gray areas of non-North American copyright law that offer lots of format choices, but none of the U.S.-based major-label commercial services offer any choice at all that I’ve seen.

    Thanks, all. I wondered if I was over-simplifying or making it to complex, but hoping I hit the sweet spot. 🙂

  • Am I the only person on the planet who uses his iPod for his German lessons?

  • umm….yes.


    I would use the iPod for foreign language lessons and audiobooks, as soon as I get around to it.

    I rip CD’s to my iTunes folder and then load my iPod, I don’t have a CD burner, nor do I need one to load up my iPod.

  • bpc

    Here’s the major difference for me right of the bat.

    iTunes: You download it, install it and can browse the store right away. No one asks you for any info till your ready to buy something.

    Napster: Download, install, then it asks you for a username, credit card info. I hate this

  • bpc, true, but then Napster also gives you free full-length samples in exchange for that credit card info, at least during the initial trial.

  • btn

    Napster + 10,000 songs to fill an iPod = $0.00 (if you take advantage of their 14-day free trial and strip the DRM, which probably violates Napster’s service agreement and some law…) Thank you, Napster, for helping AAPL to sell more iPods! I especially appreciate the 30-second spots where you prominently display the Apple logo on TV. 🙂

  • I doubt one could download 10,000 songs in 336 hours, and I couldn’t find anywhere remotely close to that that I actually wanted and don’t already have.

    But yeah, there definitely are people out there taking advantage of the trial to download music and strip the DRM (though the Winamp method has apparently been disabled, as I mentioned in the post).

    It’s tough to be the underdog, and doubly-tough when the market leader isn’t fat and lazy. Apple isn’t, yet, and the iPod still has everybody beat design-wise, with the patents in place to ensure that continues. I wouldn’t like to have the job of selling Napster, which is probably why they had to resort to someone who thinks “stupid” is a great way to gain customers.

  • I have an iPod and have filled it with 3,500 songs, and not bought a single one through iTunes. I catalogue all my Cds on my PC now… and so do it through ITunes (you don’t much have a choice with the iPod). the only downer in all of this (and it is a big one) is the redudancy.

    I have so filled up my PC with 20 gigs of CD music for my iPod that this weekend I am going to get an external hard drive for my PC (80 gigs, about $100) to move all my music to.

    So, I have all my Cds. Plus, I have them all burned onto my computer. So, I can move them all to my iPod. So instead of storing 400 Cds, I am basically storing 1200. My plan though is to move all the music off my PC onto the hard drive. Then, box up all my Cds (they are obsolete), and just work off my iPod. The hard drive is for back up, basically, in case someone snakes my iPod.

  • >>What happens if you ever decide to quit paying $9.95 a month? All of the music quits working.

    This was your lede.

    Nice piece. I’d be an iTunes / Apple user because I’m on a Mac. Still it was interesting – and not laid out too simplistically for a general audience – to read how you detailed the differences.

    I haven’t yet bought from the iTunes store but almost have a few times. There just hasn’t been something I absolutely need. Yet.

    And I was going to say it’s the new Navigator vs. Explorer (until I realized that sounded like a battle of the SUVs), but you pointed out that Apple hasn’t grown lazy – yet. They get a little control freakish, but lazy never ever comes to mind when I think of Apple.

    I also don’t own an iPod as my computer at work and at home is filled with music.

  • Joss Rowlands

    Great article, Phil.
    Here’s my 2 cents worth…
    I’m an Apple user, and have been for 20 years. I love iTunes, and equate the process of downloading music from the ITMS and burning to CD to that of going to the store, picking up my CD/Album, getting back on the bus, going home and putting said CD/album into a player or onto a turntable. The big advantage of the iPod is I can take it with me for listening to books,music and my Italian lessons(!).
    I’ve tried Napster, and just found the process of ‘renting’ music to be silly. After all, if I pay for something, I prefer to own it.

  • Temple, I realize that is the most important bit in the article for many, but leading with that would put this article into the “anti-Napster” category in many people’s minds before they had a chance to read the balanced view.

    I thought I was pretty fair, though in the end, I’m a buyer and not a renter. Burying the lede was the only way to be fair, I suspect.

  • Didn’t think of it that way.

    Oh yeah it was definitely fair. You gave it a go without ripping on it sight unseen – and then you explained why yoou didn’t like it. A good read, indeed. If I could “Advance” it, I would 🙂

  • I’m with Temple here – although I own a few portable players, almost every where I go is filled with media sources, and populated with music – meaning I do not use my portable players much.

    I would never sign up for a rental music service though – a film rental service is another deal – can’t live without it:)

  • Ruben

    I own an ipod and I am an itunes user. Recetly i bought a smaller flash player to workout and soon discover that had to unprotect my entire library if i wanted to listen those tracks in my new device. Frankly Apple design is unbeatable, and itunes usability and content offering is amazing but pisses me off that Apple doesn’t let me avail freely of music that i’ve paid and own .
    I recently installed Napster and has three nice feature vs itunes:
    1/ i can play the music i buy anywhere i want
    2/ wma encoding takes half the space than mp3, means i can store twice the amount of tracks in my small device
    3/ even if my flash device is not napster to go compatible, i can still drag and drop music from my library into the flash device from Napster nice ui.

  • Chris

    I have both an iPod/iTunes and Napster account. Because I spend more time in front of the computer than on the go, Napster’s streaming works for me. I listen to MORE than $9.95 worth of music a month, so I couldn’t recoup that kind of volume by paying $0.99 a track.

    On the other hand, when I DO want to keep a track, I download it from Napster or iTunes, whomever has it, burn it and put it on the iPod.

    I don’t see why people are so intent on one over the other. The whole “adverse to renting” is bull, since you “rent” your phone number, “rent” your car (until you turn it in for a new one), and many people “rent” apartments, which is a far greater sin, IMHO, than “renting” your music.

  • Chris, I own a home and two cars, renting none of the above. I own my telephone, too. Phone service is a service, but it is transient, unlike music. Napster is betting that people will view music the same way anyway. I think they’re overly optimistic, but the market will let us know for sure.

    Ruben, Napster doesn’t let you “avail freely of music that you’ve paid and own,” either. Try sticking some of those songs on your iPod! You can only play your Microsoft-protected songs on Microsoft-approved devices, just as with Apple.

    You own one player that is compatible with each service, and neither player is compatible with the other. And yet you single out Apple as incompatible. That’s darn fine marketing on the part of Napster, but it’s factually inaccurate.

  • I’m an ipod owner who subscribes to emusic. Does that make me dumb? They don’t have the best selection really… But they have enough obscure punk and hardcore that I’m happy with the service

    Nobody has mentioned that emusic works just fine with the ipod. Nobody has really paid attention to emusic. No pesky “protection” to circumvent, just pay money, get music. Just like going to the store… but you get no art and no lyrics and nothing to actually touch…

    The other agrument that is rarely touched upon is the record industrys arguement that P2P is killing the industry. I would go so far as to postulate that the major lables continually releasing S*%T is the reason they are losing money… Just an idea – people have no desire to pay for crappy music!

  • Nope, emusic is not dumb at all. With no DRM, the songs work on any player (well, any player but Sony’s, and even their *most* recent finally play MP3), and I found some very nice artists on emusic back when I was a member.

  • This article seems dated. lot of things have changed since then.

  • WRC

    Nice article. I am confused. I understand that I can download songs from iTunes onto an iPod, CD or hard drive. What is the file format of the download? How can I then change that format into MP3 for download to my son’s MP3 portable?

    Also, How would I convert the MP3 songs from my son’s MP3 portable, my hard drive, or from Napster (that I purchased for $0.99) into a format that can be loaded and played on the my iPod? Thanks


  • This is a REALLY great and thorough article. One of the best I’ve read on Blogcritics. I personally prefer iTunes because for one, I have an iPod, and mostly listen to music on that, and two, because it is SO annoying that songs are randomly only samples and you can’t hear the whole thing without buying it on Napster. That’s SO stupid.


    THe only problem with iTunes is that anything you buy from iTunes is a protected proprietary file and cannot, to my knowledge, be converted into MP3. If you use iTunes to rip youtr own CD’s thoose can be converted and burned as MP3’s. Overall, this doesn’t bother me, but I have had 2 iPod’s (40GB and 20GB) that failed to work properly despite all their tips, guidelines and updates. I daresay it was the updates that caused problesm, it worked with the software out of the box, but after tyhe 1st update, it was never able to load or play songs again. I don’t plan on trying my luck on another. I am completely dissatisfied with Apple’s iPod support, FAQ’s, software updates , ultimately it’s all about quality control and customer service, both of which I find wanting.

  • Well actually, as Phillip stated in the article, if you burn songs that you’ve bought from iTunes, and then rip them, they are mp3s.


    I missed that, I wonder what he uses to rip them from prtected AAC format.

  • WRC/Ski, you can burn the protected AAC files to Audio CD using iTunes, at which point they’re just normal audio, so you can rip them back from CD into the computer as unprotected MP3 files, no problem. I use iTunes for the whole process.

    You do lose a little bit of audio quality in the process, but if you’re listening on a portable device, you really won’t notice.

    WRC, also, the iPod can play any MP3 file without difficulty, but if you downloaded songs from Napster, they’re not MP3s. They’re another protected and proprietary format, WMA. *If* Napster gives you the right, you can use the same process of burning to Audio CD and re-ripping as MP3. However, Napster sometimes charges $.99 for a song and then doesn’t give you the right to burn it to CD, at which point you’d have to track down some cheat software or something.

    I can’t really help you with that part, and it’s a big reason why I avoid Napster. 🙂

  • uao

    Fascinating article, Phillip. (I realize I’m 9 months late)

    The Napster argument is a funny one: it costs $10,000 to fill one up. Bless their pure, innocent souls 😉

    File share users are still disinclined to pay for any music service; an iPod was designed to hold mp3’s, as far as most are concerned, regardless of where they came from.

    The iTunes model is the simpleat, but it does suffer from missing artists and $1 per song is just too much for a serious music consumer; it costs more than most CD’s, but unlike a CD it has no intrinsic cash value: you can’t sell it at the corner used CD shop for a quick buck.

    Napster’s model is awful; if I stop renting music, not only do I have no music to listen to, I have dead files cluttering up disc space. Screw that.

    The third option is Rhapsody, which is a monthy subscription service, but it isn’t the same as owning music; no pay, no service, making it more like an interactive internet radio station than anything lese.

    Given the three, I’d be more likely to go with iTunes, becaise they could be converted to mp3’s using the method in the article, giving them transferability and permanence.

    A buck each it steep though; maybe a dime each. Or how about a sliding scale price, where the popular stuff gets “bid” up (thus rewarding first downloaders) and the unpopular stuff drops to loss-leader prices (thus encouraging prolific downloading)?

    As an aside, I really wanted to promote iTunes as an affiliate, and I sure don’t recommend the affiliate program to anyone; it’s handled through a third party, has no meaningful customer service, is cumbersome to work with, and earns peanuts not worth stooping to the floor to pick up. They’d make more money if they’d launch an intelligent program, so I could get behind them.

  • uao, I remember before the advent of the iTunes Music Store, people were wishing they could download just the songs they want. Quite a few people were mentioning prices, too, and they usually ranged between $.25 and $1.50. Nobody mentioned a dime. And frankly, $.99 has been demonstrated to be “the sweet spot,” selling enormous numbers of songs.

    Frankly, most people who claim that a buck is too much are busy downloading the songs illegally anyway, and wouldn’t pay even a dime, when it came down to it.

    Incidentally, a sliding scale is the worst idea possible. It’s foolish to think that a sliding scale would top out at $.99 and go down from there. The labels want a sliding scale, too, but it’s so they can price some things higher than $.99, and exert control over artists that way.

    At $.10/track, nobody gets any money, and the system dies. It’s that simple.

  • uao

    Frankly, most people who claim that a buck is too much are busy downloading the songs illegally anyway, and wouldn’t pay even a dime, when it came down to it.

    Yikes, I’m not sure I like the sound of that insinuationn…

    I was being somewhat facetious when I mentioned a dime, but not completely.

    Think about it: I could go into Tower records and get some budget “best-of” CD containing 12 greatest hit, and pay $9.99 for the songs, the cover, the jewel case, and any notes included.

    Or, I could get those same 12 tunes at iTunes for $11.88 minus the jewlcase, cover, and portability that gives it a real market-price value as a trade-in object.

    Should a song by an unknown band that I’m curious but unsure about go for the same price as a well-known classic? Does that involve a decision on my part, the buyer?

    And before dismissing people (I’m sure you didn’t mean me) as “illegal file-sharers anyway” aren’t those same illegal file sharers the market online download services are trying to tap?

    10 cents a song would get iTunes more revenue than 0 cents a song, which is what they’re getting from current file sharers.

    But I’d be willing to be bid up to 25 cents.

  • uao

    And I’d start the sliding scale at a dime, not a dollar. I still think the increase in downloads would offset the loss in profit-margin (since the cost to the label is $0.00 in manufacturing and distributing, beyond server costs). Maybe not at a dime, but I bet the tipping point is at a great deal lower than a dollar.

  • I said “most,” not all! uao, I’m sure you’re safe. 🙂

    I’ve dealt with these issues in more depth in other articles, while this was dedicated primarily to a comparison of two competing services, but I’ll try to summarize:

    1. $.10 is unrealistic, and results in a net loss for everyone involved, from artist to label to website. It simply costs more than that to make the track available, period.

    2. iTunes does a lot better than you’re implying. For $9.99 you can get many/most complete albums, complete with cover (embedded within the tracks), liner notes (in PDF format), and often bonus material (for newer albums). No, you can’t resell the album to a used CD store for a buck; that’s true.

    3. Your metric for pricing songs breaks down pretty easily. You’re arguing that unknowns should cost less while known classics should cost more. Many people argue that old albums should cost less, not more, while new artists are those who most desperately need as much revenue as possible. Creating a sliding scale as you’ve suggested puts all of the power in the hands of the labels, not the consumer.

    4. My point with the file-sharing argument was this: there are several different categories of people, and while we can disagree over where exactly the break down, I think we probably will agree with some variation, there are three. 1-People who will pay any amount of money and jump through any hoops to be legal. 2-People who will never pay any money for something they can get for free. 3-People who will pay a reasonable amount, as long it’s pretty easy to do so.

    The labels aren’t worried about people in the first two groups, only the third. Apple seems to have really hit the sweet spot for that third group, and I think it’s unlikely that cutting the price per track would actually increase sales enough to cover the “loss.”

    Think about it: they would have to sell more than twice as many tracks if they cut prices from 99 to 50 cents, since their bandwidth and overhead costs wouldn’t fall. Apple, for their part, is barely turning a proft on the iTMS at 99 cents, after losing money for the first quite-a-few quarters. Server and bandwidth costs are far more outrageous than most people realize. Trust me on this one — I pay the bills for this site!

    5. The labels are in control anyway, and the pressure from them on Apple is very seriously pushing for higher prices for popular songs, not lower for less-popular songs. So far Apple has stood their ground, but contracts need to be renewed eventually.

    6. There is so much more than price to consider. Napster cut their price since I posted this, and still attracted almost nobody. They later were forced to raise it again. By the labels? Or their own red ink? It’s unclear, but that’s irrelevant. The point is, people choose iTMS in overwhelming numbers despite cheaper sources. That’s worth learning from, I think.

  • uao

    Well no doubt you’ve studied the issue more deeply than I have. And you’re right, my price comparison was unfair, you can get albums at iTunes, too. But I still think the hardcopy CD is a better deal than the digital eqivalent at the same price; I can do what I want with it, and it does have its intrinsic monetary value (which might seem like a silly point I keep making, but it is the same consideration one gives buying a car; can it be converted to cash? If so, that counts as “value”)

    I’m still trying to think of how iTunes could win over the millions who still do file-share.

    Pricing, portability, and depth of artist selection are the three file-sharer complaints about legal alternatives I hear. And many of them would pay for music (type 3 as you’ve outlined above). But they’re not going to join iTunes, where they’ll never hear some of their favorite artists ever again because iTunes doesn’t have the license. And which represents an enormous jump from what they’re currently paying.

    And file-sharers are accustomed to downloading in bulk; obviously, iTunes can’t accomdate that, but it could give the illusion of accomodating it, either via pricing or membership terms.

    If 100 hits sell for $99; and 1000 non-hits could be had for that some $99, I still think the record companies would benefit, much more than they would if the 1000-song downloader decided to go the p2p route instead, which gives them nothing. The 1000 songs cost the company no more to produce than 100 songs.

    It’s this kind of stuff people mean when they say the business model has to change. The record industry is still thinking in a units-moved mindset; this doesn’t fit the realities of the digital era– pay one monthly price is more likely to work (to avoid greed, a cap could be set on monthly downloads). But not with Napster-esque bogus sound files, but real, permanent mp3 or equivalent files.

    But anyway, you’ve certainly educated me more on the issue, and I’ll keep an eye out for your further pieces on the issue.

  • uao

    A fantasy regarding the sliding scale (It would never happen, but imagine the egalitarian possibilities:):

    The prices wouldn’t be set by the company, they would be based upon popularity; that’d make it almost like a real free-market. The new U2 opens trading at .25 and is up to .60 by midday, before settling in at a close of .51

    The Rolling Stones tumble from .91 to .35 as fans thumb nose at the new single.

    Insipid stuff like B5 would price itself right out of the market as it grew in popularity, forcing the B5 buyer to try an alternative, like the two-for-a-penny Cannonball Adderley tracks.


    Phillip, thanks, I’ll give that a try.

  • jdawg

    You know … that sliding scale isn’t as whimisical as it first appeared. Phil, I understand your point about label pressures. However, a sliding scale could put pressure where it belongs: on the artist. We all have suffered from the CD purchase that resulted in 2 great songs followed by 12 sucky ones. A sliding scale (assuming the artist recieved compensation royalties based on the same point in the scale) would encourage the artists to develop and release quality material. No longer would they be able to rely upon their hits to pull them along. I understand that the abilty to make individual song purchases does alleviate some of this pain – “The better the song, the more $.99 sales.” Adding uao’s logic – “The better the song, the more songs sold at the going rate.” The early adopters/fanatics will pay a premium (group 1 above), followed by the majority (group 3), followed by the cheapskates/non-musicphiles (perhaps new group 4?)

    I also agree that it may never happen because it would require all online music stores to agree on the principle.

    Have a great New Year and thanks for the site. Great help to us all.

  • jdawg, your naivete is almost amusing. Artists wouldn’t set the prices, the label would. The pressure would be on the artists for sure — to do whatever the label demanded.

    Besides, take a look at the charts. If you think the best music is what’s selling well, we’re not looking at the same charts! The labels have almost all the control already, and a sliding scale — which the labels are asking for! — would give them complete and total control.

  • Thad Wilkinson

    I use Napster and I don’t get the “renting music” thing. The ten bucks a month is for the ability to listen to full length versions of thousands of songs. If you want to own something then, like itunes, you buy it. It is two differnt services. Where’s the renting part?

  • Like you said, Thad, if you want to own something, you buy it. Stop paying your ten bucks a month, and see how long your downloaded Napster songs work.

    When you’re not buying, you’re renting.

  • Thank you for the info. I was a total audiophile for a number of years but it has been a while. Now just getting back up to speed about the iTunes / MP3 world.
    For me iTunes wins.
    Just like when you own a house instead of rent. You don’t want to pay forever.

  • Indeed, I mentioned above that I own a house, and in fact have now paid off one of my two vehicles, with the other’s last payment in June.

    The house is next. 🙂

  • Thad Wilkinson

    Phillip, I haven’t downloaded any songs unless I have purchased them. I listen to them on the Napster console. There are hundreds of songs I want to listen to occasionally or have intermittent access to, yet have no interest in owning. That is what the $10 per month is for. I listen to maybe 200-300 tracks per month that I would never purchase.

  • Thad, that’s fine. I’m just not the renting type; I don’t pay for satellite radio, either.

    My main point with this article was to explain the different models, and point out that Napster’s advertising was disingenuous. Some people prefer to “rent” their music, and I can see the advantages to that. Some people prefer to “buy” their music, and I can see the advantages to that, too.

  • Thank you Phillip for the excellent article and everyone else for your thoughtful comments. I’ve learned more from this blog in the past half hour, than I have over the past week researching this, since my wife bought me a 30gig iPod for our 25th wedding anniversary.

    Anyway, I’m 53, no surprise given the length of our marriage, and over that time have collected only a few CD’s, you see I’m not much of an audiophile. However, something I’ve noticed in the iTunes store versus Napster is ALL the free podcasts, videos, etc. Unless I’m missing something, that is an advantage for iTunes.

    Just as a sidenote, based on this blog and given the fact I won’t be downloading a great deal of music, iTunes seems to be the way to go.

    Again, thanks for a really useful and informative article and subsequent blog.

  • Rick, this article is now slightly more than a year old, and Apple added the podcasts and video content since this was written.

    Amazingly, nothing else seems to have changed. The prices are all still the same, though Napster seems to have stopped calling potential customers stupid, which is probably a good thing.

    They’ve not quite set the world on fire, Napster, and it appears now that I look more closely that they’ve started charging $5 more per month to actually listen to your music on a portable device with “Napster-to-Go”. At the new $14.95 price-point, the service is now $179.40 per year. Or you can stick with the all-you-can-listen Windows PC-only service for the original $9.95.

  • Ryan

    I had a fairly long, well-written continuation of this debate, but for some reason your posting system gave an error stating, “Personal attacks are not allowed. Please read our comment policy.” This is extremely frustrating as I did not use anything close to an expletive, nor did I use anyone’s name, let alone attack anyone.

    Please review your submission code.


  • The phrase “Personal attacks are not allowed. Please read our comment policy.” appears on *every* page immediately above the area where you post a comment. It’s even in red with a different background color, to get your attention! Apparently, however, it failed to do so, and you only noticed it after getting an error message.

    Ironically, you also missed the error message, similar in red, and also bold! Clearly the messages aren’t clear enough. If you try to post the comment again, you should see something like “Error: [123] Banned word” and if you can email pwinn at blogcritics dot org with the details, we’ll see what we can do.

  • has a pretty cool solution using tunebite with napster and getting free music.

  • badllama

    I am fascinated by this debate but haven’t hashed it all out. From what I can tell currently you can sign up for free, three listens to some tracks, then no more rental songs, but you can still buy tracks for .99/song. Ok, perhaps I am looking at this wrong, but isn’t this basically itunes with a bonus. Itunes charges .99 cents per track with no perk. Napster charges .99 cents per track with some free rental time.

  • badllama

    I am fascinated by this debate but haven’t hashed it all out. From what I can tell currently you can sign up for free, three listens to some tracks, then no more rental songs, but you can still buy tracks for .99/song. Ok, perhaps I am looking at this wrong, but isn’t this basically itunes with a bonus. Itunes charges .99 cents per track with no perk. Napster charges .99 cents per track with some free rental time.

  • badlama, that’s certainly one way to look at it. Of course, not all tracks are individually purchasable from Napster, and some cost more than 99 cents, so it’s not quite that simple.

    For example, Metallica recently released their back library on both Napster and iTunes. All of the songs from their old albums are available for 99 cents each from iTunes, but most of them can only be purchased as part of an album from Napster.

    Other than that, there are a variety of small ways in which I (and many others) think that iTMS simply does things better, including free tracks, free videos, and so on, but a couple of free listens may be worth more to you. Choice is good!

  • Rob

    Can someone help me chooce music store software, i cant use itunes, for some reason it doesnt work with my computer, can someone just put other alternatives out there for me

  • Eric Brunner

    Well the first time i heard of Napster was at work, because i work at Best Buy and i guess Best Buy owns napster. I tried it out for myself and love it! Its so much nicer having the streaming and being able to listen to the full song without buying it because i know i made so many mistakes on iTunes buying the wrong song because i couldnt hear the whole thing. I would definitely recommend trying it out. Its also really cool that when you download a song it goes straight into iTunes. You don’t have to do any work at all. “There’s no question that five years from now, our primary way of listening to music will be in streams of some sort.” This quote was out of the January 21, 2010 Rolling Stone Magazine from the article Spotify, Amazon Challenge Apple’s iTunes. I would definitely recommend not supporting iTunes anymore.

  • Eric, I’m sure your employer is very proud.