Why Napster’s New Pricing Strategy is More than Just Price Cuts

Napster has overhauled its pricing strategy in the US, selling pre-stored value cards in retail stores. It’s being widely reported as ‘Napster slashing prices’ but it’s more than just that.  The key things of note here are:

  • It shifts the consumer focus onto downloads: each card has a pre-stored value for MP3 downloads as the headline.  Unlimited streaming is the sub head.
  • It targets iPod owners: MP3 downloads and easy synching make iPod owners a core target
  • It lowers barrier to entry to subscriptions: by using a Pay As You Go solution Napster makes subscriptions more attainable to more consumers, even if they are sneaking them in through the back door
  • It tacitly acknowledges the dire state of premium subscriptions: the focus on MP3s moves the focus away from the subscription business, but the latter is still Napster’s core business.  To really thrive in the imeem and Spotify age they need to be unlimited MP3

This is an innovative move by Napster, and should widen their market appeal, but I can’t help but feel that it is almost embarrassed of its core value proposition (on demand streaming).  Positioning the streaming component as a freebie with MP3 tracks will weaken perceived value.  They’ll need to be careful with their positioning, or risk further weakening their ability to sell their core product, unless of course they can fire the silver bullet of unlimited MP3s.

5 thoughts on “Why Napster’s New Pricing Strategy is More than Just Price Cuts

  1. Let’s face it. No one wants to pay for music that everyone can download off some program. Napster took a huge cut by charging money…if I DID want to pay for music I would just pay $1 on iTunes and do it that way.
    BUT–if you want free music, starting listening to underground, undiscovered, never-before heard music for FREE–starting hooking up w/ sites like TalentTrove.com. They stream live music from their site 24/7…AND live stream on iTunes…
    it’s all free….and FREE is always fro ME! 🙂

  2. but nothings free, somewhere someone is making money on our music.

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