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Students Use iTunes, Even With Free Napster at Hand

By Keith Regan
Jul 11, 2005 11:39 AM PT

College students at one of the universities partnered with Napster for free access to its subscription-style music offering give the service high marks, but more than seven out of every 10 still buy music from Apple's market-leading iTunes Music Store.

Students Use iTunes, Even With Free Napster at Hand

The University of Rochester released results of a survey it conducted of its student population to calibrate the popularity of the Napster subscription approach to downloading music, the model that many analysts believe is poised to displace iTunes Music Store and its pay-per-track approach over time.

The survey found that the students were quick to sign up for and use Napster's free service, offered through a partnership with a number of campuses as a way of cutting down on illegal file-sharing, which traditionally has been rampant on campus-based high-speed networks.

Partnership Value Questioned

However, none of those surveyed bought songs from Napster when they wanted to make a track a permanent part of their music collection during the fall semester of 2004. An earlier survey found one student had bought songs from Napster in the spring of 2004.

The results call into question the strategic value of the partnerships from Napster's point of view. The universities in the program are offered steep discounts to take part, with the notion being that students who received complementary subscriptions are more likely to become paying customers once they graduate.

The survey also refreshes the debate over which sales model will emerge over time as the most popular way to buy songs online. While iTunes has enjoyed huge early success, many analysts believe subscription offerings will win out eventually.

The survey found that more than half of the students who used Napster still turned to other music sites, with 71 percent of those using iTunes, 16 percent using MusicMatch, 4 percent turning to Rhapsody and 2 percent clicking to Music Now. Smaller numbers used other services, such as peer-to-peer (P2P) networks.

Hardware Issues

One of the big complaints from students, based on the survey, was the limited compatibility of Napster songs. That can be read as disappointment that Napster tunes can't be downloaded directly to the iPod line of portable music players, requiring additional steps before they can be put on an iPod.

The dominance of the iPod, and its limited compatibility with non-iTunes music, is still the biggest advantage iTunes has in its competitive battle, analysts say.

"The reason Apple's iTunes Music Store surged into the lead is a result of the superb job Apple did with making the iPod synonymous with portable music players," Forrester Research analyst Josh Bernoff told the E-Commerce Times. "They gave themselves favorable conditions for locking in customers."

Over time, that advantage is going to start to weaken, analysts believe, as consumers become more aware of the range of choices available to them and as companies such as Napster, Yahoo and others heavily promote subscription-style alternatives. Napster itself saw an immediate jump in subscriptions following a marketing blitz complete with a Super Bowl ad aiming at the relatively high cost of filling a music player with songs using iTunes compared to Napster's subscription offering.

However, other drawbacks remain that might let Apple enjoy the view from the top a while longer. According to the survey, some students were also disappointed in the range of music available on Napster, saying they were unable to find tracks they were seeking there.

Napster did not immediately respond to a request for comment on the survey's results or their implications.

Not Giving Up

Overall, however, students were impressed with the Napster service, giving it high marks on features such as searching and song management, with a high percentage rating Napster excellent or good on those counts. A full 91 percent rated the service "easy to use" and more than three-fourths of those asked said the setup, registration and download interfaces were excellent or good.

Napster is not giving up on the college crowd. In fact, just last week, it announced a partnership with Dell to offer another college-based program that gives students access to discounted hardware and lower-cost Napster subscriptions.

Such efforts are expected to start paying dividends over time, with more and more analysts convinced that the subscription model is the one that will emerge as the winner in the online music world. Those analysts note that deep-pocketed, heavily visited portals such as Yahoo and respected music outlets such as RealNetworks, have begun to roll out subscription programs of their own.

Jupiter Research analyst David Card said the general upheaval in the music world leaves the eventual outcome in the hands of consumers, who will decide not only between pay-per-download and subscription approaches but also even what hardware will win out, with the number of MP3-enabled smartphones soon to outpace the number of dedicated portable music players in use.

Among the various vendors, "it's all about execution," Cards added. "I don't think this is a winner-take-all-market, and even if it is, it's too early for that anyway. Music services will probably support multiple companies without a clear market share leader."


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