Blog Post

Napster’s New Strategy: Free Songs, Cheaper Subscriptions

imageNapster’s latest ploy to boost the ranks of its subscribers: Give away its service essentially for free. Napster (NSDQ: NAPS) said Monday it would cut the price of its on-demand streaming service to $5 a month and also let subscribers keep five MP3s a month. Since most tracks sell for 99 cents, Napster is now charging “close-to-zero” as DigitalMusicNews.com points out.

If it all sounds vaguely familiar that’s because Microsoft (NSDQ: MSFT) introduced a similar feature for its rival Zune Pass subscription service last fall. Zune Pass subscribers can now keep 10 songs a month, although they pay substantially more — $14.99 a month. Rhapsody, meanwhile, charges $12.99 a month for unlimited streaming. It does not let subscribers keep songs.

Napster’s move, though, is likely an indication that the company doesn’t really consider those services to be its competitors at all. Instead, by giving away free songs on top of unlimited streaming, Napster is trying to give customers a reason to use its service over free offerings like Last.fm, Pandora or even MySpace Music.

It’s the first big change at Napster since Best Buy bought the company for $121 million last September. Best Buy says that Napster is now “shaking things up again” — just like it once did a “decade ago.” But it’s not exactly an original strategy — even for Napster. Last summer, for instance, the company offered a “summer special” letting subscribers keep 50 songs.