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Napster Strikes First In Europe, Beats iTunes Music Store To UK

Napster Strikes First In Europe, Beats iTunes Music Store To UK

by , 8:00 AM EDT, May 21st, 2004

Napster has beaten Apple to the punch in Europe, or at least in the UK. The company announced yesterday that it would be launching its European operations in the UK immediately.

Downloads will be priced at £1.09 (US$1.95 as of this writing) per single, and £9.95 (US$17.81) per album. Customers will also have access to Napster's subscription model, which allows users to download music on demand for as long as they subscribe. Subscribers can also purchase the right to burn a song for 88 pence (US$1.57) per single. It should be noted that local spending power is not strictly analogous to the conversion rate.

The European online download market is currently dominated by OD2, a licensing and online distribution firm that is backed by Peter Gabriel. OD2 supplies tracks to most of the small and regional online download services that are currently operating in the European Union, including the UK. Just in time for yesterday's Napster launch, OD2 announced a price cut for its downloads from 99 pence to 50 pence per single.

Industry watchers have been waiting to see what will happen when US giant Apple, or its major competitors, crossed the Atlantic Ocean to compete with entrenched OD2. Apple was regarded by many as the company most likely to first make the trans-Atlantic transition, but Napster's surprise announcement yesterday means that Apple will conceivably be playing catch up to both OD2 and Napster.

Earlier this month, UK newspaper said that the European record labels were scared of Apple, fearing the company would be so successful in Europe with the iTunes Music Store that the company would gain too much power within the industry. Apple, in turn, has reportedly been working very hard to secure uniform download rights and pricing across Europe, where copyright law is a patchwork from country to country.

"When we launch in Europe, we want to do it well. There can be no compromise on the ease of use, the depth of the catalogue or the responsiveness (of the Web site)," Apple's European chief Pascal Cagni told Reuters in a telephone interview last month.

Apple has heretofore said that it would open up a European iTunes Music Store by the end of 2004. Napster's original goal for its European market was the end of this summer.

The Mac Observer Spin:

Napster's decision to first open up shop in Britain, the world's third largest music market at US$2 billion annually, is a strategic move to establish its presence while Apple tries to work out its uniform European policies. Both strategies have merit, first to market vs. hitting the entire market at one time, but Roxio was very smart to do what it could to capture headlines, mind share, and market share in advance of Apple's European launch.

That said, however, our thought is that Apple will still have the edge when it launches in Europe. Time will tell, but Apple is batting 1.000 with its music strategy so far.

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