Napster going under?

Rumors are spreadig that Napster is in financial difficulty and that Napster executives are planning to sell the company or liquidate. Imminent layoffs are also being being reported from inside the company though officially Napster denies any problems. Though Apple iTunes has 83% of the market, they claim that since they have subscribers those subscribers are locked in. That is that if they fail to renew their subscription they lose access to their music. This brings an interesting public perception issue to the fore. If Napster goes under and people lose access to their music without being given a choice then the subscription model will die a very public death under the media spotlight. Apple will claim that iTunes customers own their music and that such a similar debacle could never happen.

Running the numbers on Napsters subscribers is also interesting. With half a million subscribers paying on average $10 per month (most subscribers are probably getting a discount from their school/university), Napster has $5 million in income every month. This is before they pay the music industry. Apple previously had sold 3M songs per day (probably more now), assuming Apple gets 1/3 of the price of the music they are making $30M per month after paying the music industry.