Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
Looking for a way to innovate new services in the digital music market, Napster Inc. has turned to the cell phone. “We think the mobile platform is exciting, and that’s why we’re running with it,” says president Brad Duea.
Napster Inc. is at it again. Looking for a way to innovate new services in the digital music market, it has turned to what until recently would have been considered a highly unlikely partner-the cell phone. “We think the mobile platform is exciting, and that’s why we’re running with it,” says president Brad Duea.
The company that turned digital music into a viable business, reversing the illegal file-sharing under the initial use of its brand, Los Angeles-based Napster is rolling out with mobile communications partner Ericsson a service that lets subscribers use their cell phones to access music from Napster.com. To accommodate the way subscribers are used to accessing digital music, Napster will also e-mail files of the same songs for loading on customers’ personal computers. “We’re targeting markets that have both PCs and the mobile solution for the capabilities of dual delivery,” Duea says.
Duea says he expects the Napster-branded service to initially take off in Europe, Japan and Korea, where mobile phones commonly operate on 3G networks that use broadband connections to the Internet. He also expects the service to launch soon in areas of North America and Latin America. “We’ll begin to see this within a year in the U.S.,” Duea says.
Napster’s deal with Stockholm-based Ericsson should give it an edge in offering the service through wireless telecommunications carriers, many of which use Ericsson’s infrastructure, Duea says. But Napster is already expecting competition from at least one wireless carrier, Verizon Wireless, which is planning to launch its own digital music offering for cell phones by early next year. “We’re working toward rolling something out in the next six months,” a Verizon spokesman says, adding that it is too soon to provide details on how the service would work or where Verizon would get music content.
Both Napster’s and Verizon’s music services need to be supported by the rollout of new cell phones capable of receiving and playing digital music, the companies say. The music-capable phones will need to handle digital rights management as well as more powerful memory and speakers than are available in existing Verizon phones, the Verizon spokesman says.
More than 700 million mobile phones will be sold worldwide this year, and 10% will be capable of handling music over the Internet, says Duea, adding that some music-capable phones are already available from Audiovox.
Although music-capable phones are at various stages of development-some can receive full-length songs while others only ringtones or streaming audio files-Napster expects consumer demand to push the market more broadly toward full-service phones that also serve as handheld media players, Duea says.
Napster hasn’t announced pricing for its mobile service, though it will offer both a monthly subscription service and the option to permanently download music to PCs or handheld devices. “Our pricing will be competitive,” Duea says. Napster currently charges PC-based customers $14.95 per month for unlimited access to its music files; it also lets customers buy individual tracks for permanent download at 99 cents each.