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So, according to this piece out on Reuters, Napster (NASDAQ: NAPS) is in a fighting mood. It recently created an MP3 download site that contains over six million tunes. Apple (NASDAQ: AAPL) has been doing gangbuster business for years with its iTunes juggernaut, so it only stands to reason that from now until doomsday there will be initiatives aimed at stealing a little bit of the big guy's thunder. Whether it's Amazon (NASDAQ: AMZN) or Wal-Mart (NYSE: WMT), Apple will always have challengers.
Question is, does this matter? Should Steve Jobs and his Apple shareholders be shuddering in their collective boots? Probably not, although any competition should be taken seriously, I suppose. I grant you that Napster is a recognizable name when it comes to web-based music commerce (heck, Napster started all the peer-to-peer ruckus way back when), and that six million compositions represents an awesome depth of musical inventory, But come on, Apple has staked out one of the most vital components of a successful business: unmatched brand equity.
Simply put, Apple's brand in music downloads is as powerful and iconic as Coca-Cola's brand is in soft drinks. Yes, the Napster service, according to the article, will have an important competitive component, namely the ability to transfer songs to other devices, including the iPod. Napster, as many of you probably know, markets a subscription-based service, but you can bet that management will now concentrate on this download asset.
But, in my opinion, Apple has such a lock on the mindshare out there in terms of song and video downloads that this new initiative from Napster won't threaten Jobs and his mission of creating shareholder value by selling a bunch of Macs via exploitation of the halo effect caused by the popularity of the iPod/iTunes brand. And it's not like the market is giving much credence to Napster's current efforts, judging by the fact that Apple closed up yesterday over 1% (Napster climbed over 5% by the end of the session, but the stock is under $2 a stub, so I'm not sure that changes my thesis at all).
This is going to be a fascinating fight to watch; I'm not saying Jobs doesn't need to monitor the situation, but I just don't see Apple losing too much to Napster.
Disclosure: I own shares of Coca-Cola; positions can change at any time.
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