Advocates of the subscription model for digital downloading will be pleased to see Napster again raise their estimated revenues, this time for the quarter up to the end of Mar. The digital music company yesterday told the investment community that it expects its total revenue for the first quarter of this year to lie somewhere between $16.5 million and $17.5 million, some way ahead of the $15 million of revenues initially expected. The company points to a considerable rise in subscriptions as the reason for increasing its revenue estimates.
Napster is the major global player using the subscription model of digital downloading, although RealNetworks' Rhapsody subscription service is also big in America and should roll out globally this year. Subscription service download platforms offer users access to huge catalogues of music for a one off monthly fee - members have access to the whole catalogue as long as they maintain their subscription. This competes with the iTunes pay as you go model where people pay for every track they download, but own the track after they have done so. A major weakness of the subscription model was that it didn't extend to portable music players, but new Microsoft DRM technology means that is no longer the case - customers can download tracks from the Napster catalogue to their MP3 player providing they sync their player with their PC once a month to confirm their subscription is still valid.
Nevertheless, critics of the subscription model say the major problem remains - that it requires a considerable change in consumer mentality for music fans to opt to 'rent' a record collection rather than own it. iTunes' market leader status might suggest those critics have a point. However services like Napster argue their model offers much better value for money and point out they also offer a pay-as-you-go service offering members permanent access to their favourite tracks. The current boost in Napster's performance, coupled with the news that, between them, Napster and Real are close to securing a million US subscribers, will give those funding the subscription platforms a bit of confidence that they have backed the right horse.