Objective: Viability of Napster as a revenue generating company. Case in brief:
Napster is a brainchild of Shawn fanning, launched on June 1 ,1999 as a peer-to-peer music downloading program for college students. Napster became a one of the most popular sites on the internet, claiming some 15 million users in little more than a year. From the beginning, Napster facing so many problems from the RIAA and music industry players. Napster violated the copyrights by allowing users to swap the music recordings for free. However, on March 5, 2001 Napster was ordered by the U.S. court to stop trading copyrighted material. The following Year Napster filed for bankruptcy and was bought out by Roxio Inc. Key success factors:
The main point in the case is the Principle of copyright protection will enable the Napster to transform itself from a freeloader’s paradise to a revenue generating business in the face of competition. Before considering the viability of Napster as a revenue generating company, analysis of key drivers of success is required. Napster is the first success story of distributed computing which is using unused capacity of the millions of computers on the Internet be an efficient source of processing power. Napster, with its central servers, is not the purest form of distributed computing, but is an important step in that direction. The development of MP3 format and portable MP3 players has played a major role in success of Napster. Situation Analysis:
If the Napster providing a service of copyrighted materials, it has to charge for these services. In this case, copyrighted music is tightly held by the recording industry and the cost to acquire those assets are extremely high. Given that copyrighted music is tightly held and the limited nature of Napster’s financial resources, Napster can only hope to acquire these assets through alliances. Moreover, an alliance will not be useful unless a minimum number of record companies commit to this alliance....
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