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    « Do Your Printers Run More than 2 Hours a Day? | Main | Connecting the Dots »

    September 19, 2006

    Unlimited Downloads?

    I do not own an iPod MP3 player, but I do own a Treo 650 mobile phone which has a built in MP3 player.  I subscribed to Napster's "Napster To Go" service.  This allows me to download an unlimited number of songs to my Treo.  Unlimited??  Isn't that a contradiction to what I said in my previous post?  Maybe...maybe not.

    Here's how Napster To Go Works
    1. I can download unlimited songs to my Treo
    2. I can't sell the music
    3. I basically can't copy the music to other devices (there are some exceptions)
    4. I can't give anyone else my log-in info
    5. If I want to burn my downloaded music to a CD I must pay for it (usually $.99)

    Is this profitable for Napster?  Well, how much did John Cronin spend in purchasing music in the last 12 months? ... Nothing!  How about the last 5 years.  Probably about $35 to $50.  Now that I have easier access to information and the ability to discover music that is similar to the music I am listening to (Napster has filters that help me) I am listening to more music.  I am also paying more for music.  I am paying more than 10X on an annual basis for music than I did over the last five years.

    What is the cost of producing a download versus a CD and its case?  What is more profitable?  Even though I have "unlimited" downloads, I believe it is more profitable than selling me CD's.

    Can you see the power of abundance (downloads) versus scarcity (CD's)?  Napster has come up with a pretty powerful business model that takes advantage of abundance and Long Tail economics.


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