Morgan Stanley
India | Friday, 8 August 2008
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Napster rolls out all-MP3 download store

By Alex Veiga
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Posted 20 May 2008 @ 02:15 pm GMT

Napster Inc. begins selling MP3s Tuesday, a move the online music service hopes will lure iPod users and turn around Napster's sliding fortunes.

Chris Gorog, Napster's Chairman and Chief Executive displays electronic devices at the Napster headquarters in Los Angeles on Monday, May 19, 2008
Chris Gorog, Napster's Chairman and Chief Executive displays electronic devices at the Napster headquarters in Los Angeles on Monday, May 19, 2008. Napster Inc. begins selling MP3s Tuesday, a move the online music service hopes will lure iPod users a...

The company is the latest to make the switch to the unrestricted file format, which makes it music tracks compatible with virtually any music player or other device.

"It's great that we have finally gotten here," said Chris Gorog, Napster's chairman and chief executive. "It is really the beginning of a level playing field, which I think is essential for Napster, but also for the health of the digital music business in general."

Tracks downloaded as part of Napster's subscription service will continue to have copyright restrictions.

For much of the decade, major record labels refused to license their music for downloading as MP3s. But steep annual declines in CD sales and the growing dominance of Apple Inc.'s iPod music players and its iTunes Music Store led the labels to ease that position last year to remain competitive.

Amazon.com is the only other retailer offering MP3 downloads from all the major record labels.

ITunes began selling MP3 versions of recordings from artists on EMI Group PLC labels last year, but the tracks are more expensive and higher quality than standard copy-protected versions.

Napster MP3s will be priced at 99 cents each, while full-album downloads will start at $9.95, the company said.

Rob Enderle, principal analyst with the Enderle Group, said he can't picture many iPod and iTunes users shifting to Napster, since iTunes software is so integrated with Apple music players.

The exception may be someone looking for a track that Apple doesn't offer, he said.

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