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Summary:

Netflix and Napster are both launching assaults on Apple, today. CNET is reporting the release of Netflix’s Apple TV rival, simply called Player by Roku, and Napster is getting into the digital music distribution with apparently an identical model to iTunes ($0.99 a song, $9.95 an […]

Netflix and Napster are both launching assaults on Apple, today. CNET is reporting the release of Netflix’s Apple TV rival, simply called Player by Roku, and Napster is getting into the digital music distribution with apparently an identical model to iTunes ($0.99 a song, $9.95 an album).

I am all for competition, but I don’t think these two alternatives provide much to combat Apple’s dominance. Let’s take a short look at each.

Netflix

Personally, I use Blockbuster Online, so I don’t know much about the current “Watch Now” plan that Netflix has. Netflix last year started allowing people to stream movies in their queue to their computer. Now, they have announced a box that will allow you to stream movies to your TV. It costs $100. According to Crave’s review of the box, it has only 5% of the top movies available to be streamed and the quality is only 480i (worse than a DVD and much worse than HD).

Granted, this is the first version of the streaming device, and Netflix has three more models coming down the line. This is never going to sell well if there are so few options.

Netflix does have more models and a cheaper price than Apple TV. These are important competitive advantages. Netflix seems to be trying to make this box replace DVD players, which is a great idea. If they make a combo DVD player and streaming device, Netflix would be much better positioned to attack Apple. Just another box that doesn’t offer as much functionality as AppleTV is not that appealing.

One great benefit of this box is that it won’t cost Netflix customers any more money to stream their movies (other than the $100 device cost). They already get their “Watch Now” movies as part of the plan that they are on.

Hopefully, AppleTV will support a reasonable subscription plan for rentals. If that happens, and iTunes can keep the catalog larger than Netflix and Blockbuster, I don’t think that Netflix has a prayer.

Napster

Napster is also fighting against the iTunes monster by offering the same thing that iTunes offers. You can buy DRM-free, 256 kbps MP3s from Napster’s online store. This departure from their usual subscription plans offers music “from all four major labels and thousands of indie artists” (from Crave)

I don’t understand why they are offering the exact same pricing as iTunes. This does not help consumers. At least Amazon was on the right track by reducing the price of songs to $0.89 (ten cents isn’t much, but it is a start). I know that Apple has sold four billion songs on iTunes at that 99-cent price point, but I think that companies could sell even more, and further fight piracy if the price point were lower.

I was in college when allofmp3.com was all the rage. I also love Russian music so that site was amazing. At first, I thought somebody “got it” and realized that if you charged just pennies for each song and it was DRM-free, it would be much easier to buy the music than it is to find illegal copies.

Napster is not offering much more than iTunes, so there is not much of a reason to start using their service, to me. What do you think? Is it enough? Napster claims 6 Million songs. Is that enough? I know that the argument has been ad nauseam about a price point that will fight piracy, so I won’t belabor the point here. I will just ask that somebody offer it! They will sell more music and probably make more money in the long run.

  1. what really pisses me off is that the record companies are now giving competitors better deals than they give Apple simply to lessen Apple’s dominance. I believe every competitor should be given equal pricing deals, especially in a case where it’s digital distribution instead of bulk manufactured goods, and then they can be more or less popular than other options based on usability and functionality. Come on record industry, stop trying to cripple iTunes by not allowing DRM free music. Give Apple the same access to DRM free music at the same prices and let innovation sort out the winner.

  2. Missing the Big Picture | The Apple Blog Thursday, July 3, 2008

    [...] mp3 store, the price point has stayed the same 99 cents. People will still pay that price, and DRM-free music is certainly enticing for those of us that even understand that. Many people don’t realize that DRM even [...]

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