Rhapsody-owned on-demand music service Napster has launched in 14 European countries in addition to its existing UK and German markets.
Alongside the now industry standard €9.99 ($9.99/£9.99) per month unlimited option, the company plans to offer "laddered" pricing with lower tiered plans to attract a broader audience for premium music. Napster has not yet announced details of tiered pricing plans, but will likely impose limits on time, number of plays and/or device usage.
US-based Rhapsody acquired Napster in 2011 and will keep the Napster brand for its international operations while retaining the Rhapsody moniker in the US.
Napster's new markets include: Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland and the Netherlands.
Unlike competing services such as Deezer and Spotify, Napster does not provide a fee ad-funded service and so will have to innovate well around pricing, trial access, and partnerships if it is to grow its market share against fierce competition in a crowded market.
Ad-funded free services can help attract a wide audience, but it is an expensive strategy to try to use advertising to sustain a music service. Napster believes the money it takes to fund a free user base will not be offset by sufficient acquisition of premium subscribers and will focus on innovating its premium product. The Napster brand has been active for years in the UK and Germany and has gained little traction with consumers. At the same time, competitors with a free ad-funded offering have been able to use the freemium funnel to drive user acquisition despite having zero initial brand recognition.
As a challenger service, Napster's decision to focus on partnerships and trial periods to boost its audience is a good initial step. Mobile operators are critical targets because of the importance of the smartphone for music consumption in all markets. Rhapsody-Napster has deals with the mobile operator E-Plus in Germany and Metro PCS in the US, as well as deals to integrate mobile operator billing. But given its relatively low subscriber base, it must do more to make these a success. IHS research indicates that the best strategy for premium music services is for bundled partnerships that hide the cost from the user, rather than limited trial periods.
Napster will find it especially difficult to gain market share in Scandinavia because those countries have some of the strongest adoption of competitor premium music subscription services. But these are also markets that have demonstrated the success of bundled partnerships; local provider WiMP (owned by Aspiro, now part of the Schibsted media group) and Spotify have used operator deals to grow their premium subscriber base.
Rhapsody-Napster is not the only company exploring lower price points to drive premium subscriptions. Nokia has added a premium Music+ tier to its mobile free Mix Radio service, which provides additional features for £3.99 per month. The UK-based Bloom.fm also provides tiered prices (alongside a free radio service) ranging from £1 - £10 per month. But IHS research indicates that pricing innovations from music subscription services have not yet made much of an impact.
Rhapsody claims the decision to keep the Napster name for its international activities is based on the brand's strength. However, IHS believes few consumers associate the Napster brand with legitimate premium music and instead remember its earlier incarnation as the free file sharing service from the late 1990s and early 2000s.
To succeed, Napster must successful strike numerous significant partnerships - especially with mobile operators -- to revitalise its brand and strengthen co-marketing resources to build scale. Napster must also innovate around the core music service to be better than its larger rivals. It's a lot for Napster to do, and although it's not impossible, it does risk being too little too late for a major European launch.