Napster has unveiled its Napster To Go service, revealing that UK music fans will have to pay twice as much as US-based customers.
The company and its partners have big plans for the subscription-based service, believing that its major selling point is price. Napster To Go lets users carry just about whatever music they like on a compatible music player – not iPods – for as long as they pay a monthly subscription.
Napster told PC Advisor: "We see it as a simple choice: Pay £7,900 (about $14,871) to fill an iPod up with tunes, or spend £14.95 per month (£179.40 per year) with Napster and refill to your heart's content."
Of course, this ignores the fact that most music-player users will already have a collection of their own tracks. And while the service costs £14.95 a month in the UK, it’s only $14.95 a month in the US. At current exchange rates, UK users pay $27.95 each month for a service that costs US users $13 less – a difference of $156 (£83) a year.
Some of this is explained by VAT, which is not charged in the US. If VAT is removed from the UK price, Napster To Go is a more reasonable £12.72 each month. That’s the equivalent of $24 – a difference of $9 (£5) a month – or $106(£56)a year.
Straight currency comparisons can be unfair as currency values fluctuate. As Napster said: "You can't compare different currencies, particularly when the US doesn't have to pay VAT." But taking VAT into account a significant difference in price remains. Echoing Apple’s response to previous criticism of the difference in prices between territories, Napster blames the music labels.
"Licenses (to distribute tracks) have to be secured in local territories – and our US colleagues get a better price from the labels that we do in the UK," the company said.
The Consumers Association – which has forced a Europe-wide investigation into Apple's iTunes prices – is aware of such issues. Speaking in December 04, spokesman Phil Evans said: "When we made our complaint about iTunes we specifically said we were concerned about all territorial practices – particularly in licensing – which the OFT acknowledged in its statement."
Despite such price grumbles, Napster continues to drive its service based on cost: "iTunes is a one-dimensional business model that exists (and is subsidized by) the enduring popularity of the iPod. We expect many disgruntled iPod owners to ask Apple why they are having to pay so much to fill their players and why they can't use them with Napster."
Apple has failed to engage Napster in battle – as yet. Requests for comment have been met with silence from iTunes Music Store.
When Apple, Napster or any other digital music download seller shifts a track the customer owns that track in perpetuity. Labels and artists are paid a similar amount to what they would earn through any other kind of retail sale. Artists’ royalties as high as 13 percent of the label’s share of the sale are paid (around 80 percent of the iTunes track price), in addition to any relevant royalty to collection agents, such as PRS or MCPS.
When you get a track through Napster To Go, a different type of royalty model ensues.
While it's reasonable to assume Napster is paying labels a fee for the rights to distribute tracks, artists’ royalties for such services are accounted differently. Napster pays each time a track is played.
These royalties are collected in the UK by the PRS/MCPS Alliance. They are flat rate and shared between artists according to set criteria. To count track plays, Napster To Go has the capacity to monitor your listening habits.
Napster explained: "Every time a track is played using Napster, then the rights owners get paid using our automated back-end system. In the case of Napster To Go, the music players log track plays and when the player is plugged back into the client, it updates our records."
Napster To Go requires that users plug their music player in each month to keep the tracks they have on board functioning, which also serves to update the company's database servers. Up to three music players can be maintained for each account.