Most consumers haven't accepted the subscription model of renting rather than buying music, but Napster's chief says this is likely to change over the next year. Once synonymous with piracy in online music, Napster now offers music via a subscription service. But it is hindered by the dominance of Apple Computer's iPod which, due to a rights management issue, cannot play music purchased via Napster.
Napster Chief Executive Chris Gorog says Apple's approach is "anti-consumer" and had held back the subscription model. But Gorog expects the picture to change as consumers turn to mobile phones that also operate as MP3 players. He believes this access to a wider market will introduce more music fans to the concept of unlimited subscription services.
"The key obstacle to date to moving into mass adoption for the subscription model has been the iPod which has had the very large majority of market share with MP3 players," he said. "But the dynamic that will be happening?in this calendar year is the phenomenon of music-enabled cell phones?Napster will be going from an available market place?of basically zero to ubiquity."
In its earliest days, Napster almost single-handedly launched Internet song swapping but was forced to close in July 2001 after a series of legal battles over copyright infringement.
It relaunched as a legal download site in 2003.
Earlier this month, Napster announced that it had signed a deal to become the exclusive online music subscription service to AOL, giving it access to an additional 350,000 subscribers on top of its current 566,000 paid subscribers.
Gorog said he expects the majority of AOL customers to join Napster, making it the No. 1 subscription service worldwide.
eMusic, the independent subscription service, announced this month that it had 250,000 subscribers. Rhapsody, another service, does not publish its subscriber numbers.
Digital rights management, or DRM, was introduced by copyright holders to stop unauthorized duplication.
Napster uses the Microsoft's Windows PlayForSure system which was dealt a blow recently when Microsoft launched its own music device, the Zune player, with a different DRM.
But Gorog said he is not concerned by Zune as he did not think it was a "player" in the market and said Microsoft is still supporting the PlayForSure system, with mobile phone makers Nokia and Motorola signing up.
Napster said in September that it had hired investment bank UBS to look into several possibilities after it received "interest by third parties." Gorog would not give any further details on the issue and said simply that all options were on the table.
