Best Buy's Napster takes a value stab at Apple's iTunes

Posted May 20th 2009 6:20PM by Brian White
Filed under: Consumer Experience, Competitive Strategy, Best Buy (BBY)

When the Napster brand woke up the music industry using illegal downloading almost a decade ago by allowing digital music swapping across the internet, a completely new cottage industry was born. Pretty shortly, Apple, Inc. (NASDAQ: AAPL) came long with its iPod and iTunes product and made the business model work for legally downloading music. On that note, Apple has the lion's share of music downloading business at this time, although many a competitor has cropped up in the last five years.

Now that Best Buy, Inc. (NYSE: BBY) owns the Napster brand, it could be trying to either re-invent the brand or seriously mount a competitor to iTunes. To some, that's laughable -- iTunes has seen a huge slew of competitors come and go and still has not found any serious threats. Apple figured out long ago that customers want to own music, not rent it.

But how about this -- Napster will now charge you $5 a month for access to five complete song downloads -- plus unlimited music streaming from Napster's huge library. You don't own the streaming or rent it -- you get it for free. While Apple continues nickel-and-diming for songs, Napster will let you stream for free. Of course, you need an internet connection for that, something the iPod does not need as you jam to your tunes. Will this rather unique business model be one of the first to actually take market share away from Apple's iTunes? If it will be able to stream everything from latest hits to top acts and everything in between -- for free -- iTunes could finally face something with a scent of innovation.

Tags: Apple, BBY, Best Buy, BestBuy, Inc., iTunes, Music downloads, MusicDownloads, Napster