Napster Case Study

Topics: Music industry, Disruptive technology, Music Pages: 5 (1768 words) Published: November 25, 2012
Napster & MP3: Redefining The Music Industry


Napster was the first, very innovative music technology application that allowed users to download MP3 from the internet and other peers for free, or at a cost. Napster strongly adapted the word sharing and put it their own terms to avoid any copyright infringement but it ended badly on their part. This disruptive technology was leading the market and had over 60 million users by 2001. Although very similar technologies were soon after developed, Napster was still on top and lead the market. Many users knew exactly what they wanted but getting it seemed to be the difficult part once Napster and the RIAA went into a legal battle. More commonly, the industry has been shaped from Napster and the base product that has been derived. Napster may have been a failure to the industry but it shaped the industry for the future from 2001 until present and for years to come.

1. What is Napster’s business model?

Being as though Napster was the first to market with their music search engine for MP3 files, they successfully managed to set up an online community where users could download these files. Napster had its market segments and was targeting the college and high school demographic, as described in the case study. The main objective was to give users the opportunity to listen to the songs before they wanted to go ahead and purchase them. During the boom, when Napster was created, it seemed as though the developers only wanted to create the program to attract a client base to increase the value of the company mainly to sell it off to a larger, more valuable company. Once the main database of Napster was created, they started off by seemingly trying to create a membership based business model. They had a free membership to start as a trial run, basic membership for relatively inexpensive that would cost between $2.95 and $4.95 per month. This basic membership would have a limit on file transfers. They also had a premium membership that would cost between $5.95 and $9.95 with an unlimited amount of file transfers. Most of these file transfers came from peer-to-peer which was part of the interesting aspect of Napster. Users could upload files from their computer to their Napster desktop and another user could download straight from their computer. Certain users had a better rating than others and so forth. It seems as though their business model was working until the music industry became aware of what was really going on.

2. How have Napster and MP3 changed the music industry?

Napster and MP3 were the start to the online music industry databases during the boom. This was the beginning of the greatest innovations yet to come. Not only did this lead to what we now use as iTunes but it went through multiple transformations with different music download programs and revamped the way artists were selling their music. CDs were most common before Napster and now, the percentage of CDs compared to online purchases are completely reversed. Many people don’t even own CD players unless they are on their computers and iPod or iPhones are the new use of music play. Without Napster, none of this would even be possible because the whole concept of having the MP3 on a database where you can see each song and download right from the Internet. Now, you have to purchase each song or album and the artists get credit for their work. Back when Napster was the source with MP3, there were possible ways around the memberships and for a very light fee, you could get music for almost nothing where the artists were not getting the compensation that they deserved and worked for. The music industry is completed revamped since Napster and thanks to Napster and MP3, we now have the convenience to purchase a song or album right at the touch of our fingertips or click of a button as opposed to going to a store and buying a CD.

3. Who are the winners and the...
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