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Napster Business Model Not Generating Revenue
An anonymous reader writes "We all know that Apple generates revenue from iTMS via hardware sales. How the hell can pureplay music stores like Napster generate revenue enough to even stay alive? They don't. Is this the first indication of the bubble bursting? Is it time to figure out what to do when your Napster WMA files go unsupported after Napster 2 dies?"
It means if Napster goes away and you lose your file, you're screwed. You can't get it again even though you paid for it.
Windows Media licenses can be permanent, time limited or limited by number of plays. From the files I've seen Napster licenses are permanent. So if Napster dies, your licenses still work.
But hey, lets not let facts enter into this <g>
No, it's not perfect, but it's what we've got.
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It means if Napster goes away and you lose your file, you're screwed. You can't get it again even though you paid for it.
If that happens then your screwed anyway, even if Napster are still around and turning a healthy profit, something I'd personally like to see. Read the licence agreement.
I quote: "If you have Purchased Tracks, it is your responsibility not to lose, destroy or damage them. Napster shall have no liability to you in the event of any such loss, destruction, or damage."
But since CD burners are mainstream now, and your allowed to burn each track to a CD up to five times, it's not too much to ask someone to take responsibility for looking after what they buy.
Worst case is you burn your stuff to disk and re-rip to mp3 or whatever the current DRM-free format is at the time (or use one of the shareware utilities that does the equivalent without the need for an actual disk), at the price of a small loss in quality.
Sure, hate iPods if you want, that's your prerogative. But don't hate 'em thinking they only play DRM-ed files, because that's simply not true. They're a good deal more open than most others, in fact -- AAC is an open standard (it's the audio layer of MPEG-4, just as MP3 is of MPEG-1; it's even from the same people), unlike WMA...
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Seriously, I don't think the problem is the AAC, it's the DRM. And that is common between iTunes and the WMA stores.
Apple makes 35 cents for each song they sell. Of course they have bandwidth costs to cover, and the whole developing costs, but given their stellar sales it's hardly fair to say that Apple only generates iTMS revenue through pushing hardware.
I hadn't known there were so many idiots in the world until I started using the Internet -Stanislaw Lem
Because then people could listen to a single song streamed over the net and copy it to disk using a utility like Wiretap. If you could easily obtain a complete album in the time it takes to listen to it that would completely kill their business. Now, maybe 30 seconds isn't quite long enough, but it's not too bad and seems a reasonable compromise.
Under Windows Media Player 9, go "Tools, License Management". Shove it in a folder, and burn your license _and_ the WMA files to a CD. No more quality loss (beyond the existing WMA conversion loss).
Contact Me (got tired of viruses emailing me).
For the computer - but you can back up the licenses and transfer them to another computer. It's a bit of a hassle compared to non-DRM'd files, but it works well enough.
Second, how will you ensure that this stream isn't diverted to somewhere else -- say, a hard drive? Once people start saving it, it's only a matter of time before their entire library is available on Kazaa. Programs such as StreamRipper32 already make it trivial to save shoutcast radio streams to mp3 files; I imagine this effect will be duplicated fairly quickly to save these streams.
I made a PHP/MySQL library that prevents SQL injection & makes coding easier!
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Date: Wed, 21 May 2003 09:29:24 -0700 (PDT)
Subject: Napster - any value in the brand?
I've been trying to figure out the breakdown on costs for iTunes, here's what I've got so far:
.99
.29 .70 publishing rights & other payments to labels
.24 .05 Credit card transaction base fee
.21 .03 Credit card % of value fee
.16 .05 Fraud / charge back cost
.14 .02 Media delivery (bandwidth cost)
.09 .05 Hardware / infrastructure costs
.04 .05 Salaries & overhead
Balance Cost
Even at 2,000,000 song sales, that's not a lot of remaining gross margin, like $80,000 over two weeks and I suspect it's declining as well.
The other way to look at this is that it's a loss-leader for iPods and other Apple hardware :-)
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Over the summer Steve Jobs confirmed that iTunes is not currently and may never be a profitable service.
Napster is trying the university thing because it provides them with a fixed, recurring revenue stream. I wish them luck.
the iTMS sells AAC files that have been wrapped in a FairPlay encryption wrapper. Plain AAC files are not encrypted or restricted in any way.
Plain AAC files have two copyrights and several patents on them. The two copyrights are the copyright in the musical work owned by a sheet music publisher and the copyright in the sound recording owned by a record label; they come into play whenever anybody redistributes a recording in AAC format phonorecords.
If you mean only technological restrictions, AAC has those as well. Without a decoder, you cannot play back AAC files, and it's a federal tort in the United States to distribute AAC encoders or decoders without paying the holders of patents that cover the methods that make up AAC.
Wow, a business loses money in its first three months of launch. News at 11. They also say:
While maybe we don't want to believe them and they won't reduce these costs, it seems pretty likely. So saying "they don't" make any money is patently ridiculous, we don't have anywhere near enough data or time invested.
" At the beginning Microsoft did not generate revenue. No pure software company"
False false false. Microsoft was making a ton of money writing embedded basic LONG before MS-DOS/PC-DOS was a twinkle in Bill's eye.
When PC's started to become mainstream, virtually anybody who could use an assembler and write software was making money. The cost of entry was so low that you couldn't *NOT* make money. Software was copied onto cassettes, but in a baggy, and shipped right out from your kitchen table. The only cost was the ad in "CREATIVE COMPUTING".
Oracle...profitable from the START because Naval Intelligence gave them the money to develop an RDBMS. Oracle was always profitable.
Stop repeating crap like this.... some of us were there, the history is well documented in a million books. Your saying Software was intially unprofitable flies in the face of history and personal experience. In otherwords, you are about as wrong as you could be on the subject.
Xbox is easy as hell to develop for, it runs direct X and a win2k kernel, any Game made for X-box can be "ported" to PC for next to nothing, possibly even just a recompile, oh and the X-box controllers are really USB, just a proprietary cable. There are alot more experienced PC game programmers than GCN programmers, while PS2 has been around a bit longer and has the benifit of being #1 to draw developers
Snowden and Manning are heroes.
FWIW, BMI and ASCAP are not publishers. They merely collect the funds owed to the songwriters by those who use and sell the music.
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Is it time to figure out what to do when your Napster WMA files go unsupported after Napster 2 dies?
Sure, use the age-old trick of defeating the copy-protection on your files: Get a 1/8" stereo mini-plug, and use it to loop from your audio to your microphone in. Then re-record all your music in a format that isn't crippled. You could even write a program to automate the process, although it would take as long to convert your files as your files are long in play time, unfortunately. But such is the nature of the analog 'last 1/2"' (distance between your sound card's audio out and audio in) solution.
The Right Reverend K. Reid Wightman,
Nope; it's short for "MPEG Audio Layer 3", where the MPEG is the first version, later called MPEG-1. (References: mpeg.org, Fraunhofer.)
AAC was developed for MPEG-2, and improved for MPEG-4.
I'm a tad confused by this paragraph...
I was trying to put the restrictions on AAC into a context people would be familiar with. As you say, it's not treated exactly the same as MP3, but it's very close in most respects, as compared with WMA, FairPlay-protected AAC, Real, or other formats.
I have yet to encounter a single consumer implementation of an AAC encoding/decoding piece of software other than Apple's.
I came across FAAC earlier today. As you say, there's not a lot else; but considering the high usage of iTunes, QuickTime, the iTMS, and the iPod, I expect to see more in future. (MP3 took a while to take off, too.)
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