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February, 2005

Napster's Math Aint So Good

Most of us saw those Super Bowl commercials where Napster To-Go did the math for us. Since then lots of people have chimed in on how Napster's math may not be so accurate. The most obvious oversight in their little equation is the fact that most people already own some music, so filling an MP3 player doesn't require buying as much music as Napster would like to believe. Here's an excerpt from an article from The Register titled "Why Napster will be a fully-integrated flop:
Let's take a look at consumer A. This consumer goes to Amazon.com and does a search for Creative - one of the Napster supported music device makers - and picks up a 20GB player for $249.99. Let's assume he keeps the device for three years, paying Napster all the time. That's $538 for the Napster service, bringing the three-year total to $788.19.

Consumer B types iPod into the Amazon.com search engine and finds a 20GB device for $299. Apple doesn't offer a subscription service, so this customer has to buy songs at the 99 cent rate or at $9.99 per album. Subtracting the price of the iPod from the $788, consumer B would have $489 left over for music. That's roughly worth 489 songs or 49 albums.

We posit that during this three-year period both Consumer A and Consumer B will actually end up with close to the same number of songs on their devices. Customers do not, as Napster suggests, pay $10,000 to fill their iPods with 10,000 songs just because the capacity is there. They take their existing music, CDs and MP3s, and put that onto the device first, then later add iTunes songs as they go along. A Napster customer would have a similar mix of old music and new downloads.

The big difference here is that after the three years are up, Consumer B has something to show for his investment. He still owns the music. If the Napster customer stops paying for the service, his music is all gone. He's paying $179 per year to rent music. This isn't high quality stuff either. It's DRM (digital rights management)-laced, low bitrate slop.

Seems like a fairly simple argument to me. Rob Pegoraro puts it even more simply in a Washington Post article:
Consider this example: I have been purchasing CDs for about 20 years now, in which time I've accumulated about 300 of the things. At an average of $15 each, I've spent $4,500. Now suppose that, instead of buying those CDs, I could have opened up a Napster To Go account back in 1985. My total bill would be $3,600 and counting -- and although I might have accumulated a larger, more diverse collection, I wouldn't own any of it.
Now that Napster's math has been debunked, what else is there to learn from Napster To-Go? Well, a Boing Boing reader had this to say about Napster's $15-a-month deal and the RIAA claims of being hurt by every download:
Another aspect of the Napster to Go model is that it shows that the RIAAs claims of a lost sale for every download to be demonstrably false. If you can download an unlimited number of songs via napster and play them for as long as you continue to subscribe, then the maximum loss the RIAA suffers from a single downloader cannot exceed $15/month no matter how many songs a person downloads.
A great point. I can't help but wonder how the RIAA would respond to that one. Clearly there's a different message being sent by these subscription services. Maybe the average person doesn't buy more than one album a month anyway ($15), which is why music downloading has not actually hurt CD sales. Maybe Tower Records' bankruptcy has less to do with downloading and more to do with the fact that their music is overpriced. I would also love to know how specialty CD shops are doing. I know that New York City's Other Music always seems to have people in there.

So what's really going on here?

While we're on the topic of heavy-handed organization's, check out the notice the MPAA left of newly shut down LokiTorrent. In all caps it says, "YOU CAN CLICK BUT YOU CAN'T HIDE." That's followed by:

There are websites that provide legal downloads. This is not one of them.

This website has been permanently shut down by court order because it facilitates the illegal downloading of copyrighted motion pictures. The illegal downloading of motion pictures robs thousands of honest, hard-working people of their livelihood, and stifles creativity. Illegally downloading movies from sites such as these without proper authorization violates the law, is theft, and is not anonymous. Stealing movies leaves a trail. The only way not to get caught is to stop.

Are they serious?
February 15, 2005
Noah Brier | Thanks for reading. | Don't fake the funk on a nasty dunk.