DailyTech - Circuit City to Offer Music Subscription

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Software Circuit City to Offer Music Subscription
Michael Hoffman (Blog) - April 21, 2007 3:00 PM

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18 comment(s) - last by Oregonian2.. on Apr 23 at 5:54 PM

Circuit City + Napster is scheduled to launch on April 29

The online music business is about to get another competitor into an already crowded market. Circuit City has announced a deal in which it will work with Napster to offer an online music subscription service. Users of the Circuit City + Napster service will have access to millions of songs in the Napster library along with weekly access to a select few tracks that are not available through Napster.

The service is scheduled to begin on April 29, 2007. Users will have to pay $14.95 per month, or purchase individual songs for $0.99. New subscripters will get one month free and five free song downloads. Users can also purchase prepaid download cards in 15, 25 or 60 track increments.

Users of the service are free to put downloaded tracks on any type of MP3 player -- regardless of whether or not Circuit City sells it, according to a Napster spokesman.

Music downloads have increased as customers are purchasing less CDs, with the Apple iTunes download service dominating music sales. A number of companies have created partnerships in an attempt to compete with iTunes. For example, Best Buy, SanDisk and RealNetworks introduced a subscription service late last year.

Circuit City hopes the new music download service will help the struggling company turn around. Circuit City, operating as many as 650 stores in the U.S., recently fired 3,400 "overpaid" employees. The company is expected to make more steps as it tries to reduce costs.

Napster will benefit by giving the company another outlet and another marketing push that could lead to more subscribers.

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Tried and Failed

By feelingshorter on 4/21/2007 7:21:30 PM , Rating: 3

People just don't like the idea of having to pay monthly charges for their music. The .99 cent a song is just like Apple and will work out but the monthly payment thing has been tried out before. Colleges (many big ones) who teamed up with Napster to offer students who attend the college the monthly plan for FREE. Yes, thats free music as long as you attend a college that offers it. Despite having posters placed around such colleges to make sure they are aware of it, students aren't even taking the deal. Thats a fact, not an opinion. Rates of the student population taking free Napster is only like 2% if I remember correctly. There was a businesweek or WSJ article on it.

RE: Tried and Failed

By noirsoft on 4/21/2007 7:59:28 PM , Rating: 3

I disagree. I think that a monthly subscription is far preferable to a per-song fee. Why should I pay .99 if I listen to a song just once? I use URGE monthly, and I found the ability to just pick a song and download it is far far easier than messing with paying for individual tracks.

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RE: Tried and Failed

By Oregonian2 on 4/23/2007 5:51:47 PM , Rating: 2

One year later one has spent $180 with nothing to show for it. Could have 180 Apple songs or a pile of CD's to add into the next year's pile (and the next year's pile... etc). I've been buying CD's since getting the CDP-101 Sony player (so-first CD player sold), and I've now got a LOT of CD's, most of which I still like (plus the few with only one good song on them, but I tended not to buy those, so there aren't that many). For one-shot songs I just listen to the radio. Free.

P.S. - Still have that player in a box in the garage. Historical piece. Heavy as heck and FULL of massive circuitry.

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RE: Tried and Failed

By borowki on 4/21/2007 8:37:12 PM , Rating: 2

I don't think people are inherently hostile to the idea of music subscription. They just dislike the hassle of an additional bill. Software/hardware incompatibility problem and usability issues obviously do not help. And the lack of mobile access in today's systems largely negates the chief benefit of the subscription model. Transferring songs from a computer to a portable device takes time and planning in advance after all. You would need to do that hundreds of times, even if you were to hear only a small faction of the millions of songs promised.

What is needed is a sort of an on-demand system operating over a cellular network and which is bundled with a phone plan. The first company that'd make it work will no doubt be Apple.

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RE: Tried and Failed

By noirsoft on 4/22/2007 1:34:23 AM , Rating: 2

I'm curious about a few of the points you make:

What is the hassle of an automatic bill? Are you saying that the existence is a hassle or something else?

What incompatibilities? Other than the obvious Apple/Non-Apple divide, what do you mean? That certain older players don't play subscription content? I only buy Creative products (so far) and haven't had any concerns of this nature.

Transferring: I had a Rhapsody subscription a while back and indeed had a few problems of this nature (mostly due to Real's bad-as-expected software) but URGE has been very good. It reminds me if songs have expired and that I need to re-sync my Nomad. Now, if I had my cradle attached to the computer with the URGE sub and synced every night, I expect that I wouldn't have this problem.

Given that one has to sync a portable player even with a per-song purchase, I don't see this as favoring either model.

As for your last comment: Isn't that what Verizon's V-Cast already does? The FAQs on Verizon's site suggest as much.

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RE: Tried and Failed

By borowki on 4/22/2007 5:38:23 AM , Rating: 2

quote:
What is the hassle of an automatic bill?

Having to remember to cancel it, for one thing. Just because a bill is paid automatically doesn't mean you can just forget about it.

quote:
What incompatibilities? Other than the obvious Apple/Non-Apple divide, what do you mean?

There's also the Zune and Sony's offering. Multitudes of players and multitudes of services means a lot of possible combinations.

quote:
It reminds me if songs have expired and that I need to re-sync my Nomad.

That's not what I was referring to. When you transfer songs into your portable player, you have to basically predict what you'd want to listen to in the future. It takes mental effort and time to select the songs. If you listen to the same list all the time, then you're taking full advantage of the subscription. If you don't give much thought to the song selection, then you might as well just listen to the radio.

The subscription model would deliver its full potential only when users can call up a song anywhere, at any time. Being able to hear any song on a whim--that's the attraction. Apple with its iPhone will be a good position to launch such a service.

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RE: Tried and Failed

By noirsoft on 4/22/2007 5:47:10 PM , Rating: 2

quote:

Having to remember to cancel

I guess we have diffferent definitions of "hassle"

quote:

There's also the Zune and Sony's offering. Multitudes of players and multitudes of services means a lot of possible combinations.

A subscription-based service has fewer incompatibility issues than a purchase-based system. If I quit one service and join another due to buying an incompatible player, all I need to do is re-download my songs. If I purchase songs from iTunes and then decide to switch to a better player (like a Nomad) then I have no way to transfer my songs. That strikes me as a greater incompatibility.

quote:

That's not what I was referring to. When you transfer songs into your portable player, you have to basically predict what you'd want to listen to in the future

While I certainly admit to not being a typical music purchaser (I almost always listen to albums rather than songs) I just don't see this as a major issue. With a 30gig Nomad, I don't have enough music to fill it, so my "prediction" is merely "sync everything" -- Even a small 4-gig USB flash drive plugged into my car stereo lasts over a month before I begin to get tired of the music there.

quote:

The subscription model would deliver its full potential only when users can call up a song anywhere, at any tim

The same thing is true for individual purchase-based services, so is irrelevant to the current discussion. The only difference is whether you pay for the song when you download it, or pay monthly.

quote:

Apple with its iPhone will be a good position to launch such a service.

Again, I mention that it already exists with Verizon V-Cast phones. I've not used one, but it seems to do everything you say. So, as always, Apple is behind the curve except on marketing.

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RE: Tried and Failed

By TheTerl on 4/22/2007 2:42:44 PM , Rating: 2

I'm not sure if that's entirely fair. When I read that report, I was under the impression that the 2% figure they cited was the number of subscribers who have also gone ahead and purchased tracks*. What that really says to me is that there may very well be a market for subscription services, though probably not nearly as large as the iTunes market, but when you try to combine the two it just doesn't end up working very well.

* As an aside, for those not familiar with the system, Napster makes a large number of newer tracks unavailable for paid subscribers, presumably so that those subscribers will purchase the tracks and generate more profit.

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RE: Tried and Failed

By viperpa on 4/22/2007 4:11:49 PM , Rating: 2

I never had to use ITunes, I switched all my CD's over to mp3. I decided to use Itunes the other day to get a couple of songs. Now evertime I want to play the music I purchased I have to sign into ITunes. I know a guy who has the same problem with Napster. What kind of garbage is that? Now I knew why I never signed up for any of the music services.

To be honest, this team up is not going to last very long.

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RE: Tried and Failed

By noirsoft on 4/22/2007 5:49:03 PM , Rating: 2

I have another comment:

The reason the campus thing failed has nothing to do with subscription versus individual purchase. It has to do with the fact that most college students have an iPod, and so downloads from Napster don't sync to their player, and are thus of less appeal than iTunes or illegal song downloads.

It says more about Apple's stranglehold on the market than about revenue models for digital distribution services.

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The Stakes Have been raised

By BMFPitt on 4/21/2007 4:15:24 PM , Rating: 3

Will they be offering DRM-free for $1.29 (or less)?

If not, then I see no reason to care.

RE: The Stakes Have been raised

By techfuzz on 4/21/2007 5:04:43 PM , Rating: 2

quote:
Users of the service are free to put downloaded tracks on any type of MP3 player

This statement pretty much assures that they will be DRM-free.

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RE: The Stakes Have been raised

By EndPCNoise on 4/21/2007 5:59:40 PM , Rating: 2

Not necessarily true. Files may be loaded onto any type of MP3 player. However, the files may have quantity restrictions and/or length of time restrictions by DRM. Quantity may be limited to only 3 or less players. Length of time could be limited to say 3 to 5 years?
These are a some reasons I'm not fond of some DRM technologies.

Isn't more competition supposed to bring down the cost of MP3 files? I was expecting the cost to have dropped more by now.

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RE: The Stakes Have been raised

By BMFPitt on 4/22/2007 12:05:15 AM , Rating: 2

The price isn't set buy the services, it's fixed by the industry. They are (essentially) the sole providers of content, and charge whatever the market will bear.

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RE: The Stakes Have been raised

By alifbaa on 4/22/2007 12:21:18 AM , Rating: 2

Actually, they are charging more than the market will bare. Look at the music industry's sales over the last several years. What they are doing would be called price fixing in any other (i.e. less politically connected) industry.

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RE: The Stakes Have been raised

By Talcite on 4/22/2007 1:43:37 AM , Rating: 2

I agree. Music is a tricky matter because the marginal cost for another copy of the CD or song is zilch.

It's hard to determine what the optimal cost for a song can be. Most of the time it's just the highest cost/copies possible, so the producers benefit, the consumers lose and total surplus isn't at an efficient level.

It's shocking to say it, but downloading was probably one of the best things to happen to the music market (includes consumers too) from an economics standpoint. It moved power from the producers back to consumers. Of course that only goes to a certain limit, people still have to buy music at some point.

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