Record Label and Napster S Strategy

Napster, developed in 1999 by Shawn Fanning, is a program that allows medicament to be traded over the internet. People were able to voice high quality digital copies of euphony recordings over the internet using Napster. Napster did non store the recordings, however. It allowed its members who were logged onto the service to choose from an mogul of songs. Napster was one of the most popular sites on the internet. The site had some 15 cardinal users in a years time. Many college students drinkloaded so umpteen songs that many colleges had to block the site from their system.A year by and by its launch, Napster was sued by the Recording Industry familiarity of America (RIAA). The RIAA represents major recording companies. The RIAA claimed that copyright laws were violated by Napster for allowing users to swap medical specialty recordings for free. The RIAA sought to relinquish the downloading of copyrighted songs, as well as damages for befuddled tax revenue. Song swa pping had cost the music diligence more than $300 million in lost sales. A few months later, Napster was sued by a heavy metal band, Metallica, and beg star Dr. Dre. They were suing Napster for copyright infringement.In 2000, a assess granted the request of the RIAA and ordered Napster to stop making copyrighted recordings available for download. This would direct shut Napster down. Napster was granted a last-minute reprieve until the lawsuits could be tried in court. Despite its many claims, Napster was found blameable of direct infringement of the RIAAs tuneful recordings. The follow was ordered to stop allowing its millions of users to download and sh ar copyrighted material with pop justly compensating the owners of the material (Ferrell & Hartline, 2008). Napster later offered $1 billion to the recording perseverance to settle the lawsuit.Napster as well agreed that $150 million would be paid per annum for the first quintuple years to Sony, Warner, BMG, EMI, and U niversal, and $50 million annually was allotted for independent labels. The recording industry refused the offer. The industry wanted Napster to shut down for good. Napster tried many times to via media with the recording industry, but to no avail. Napster filed for Chapter 11 reorganization in 2002. The company withal tried to reach a raft with Bertelsmann AG, their strategic partner. A few months later, a Delaware judge blocked the sale of the company to Bertelsmann.Napster then laid off closely its entire staff and proceeded to convert its Chapter 11 into a Chapter 7 liquidation. Many music labels were dabbling in online music distribution. Napster had clearly overcome them to it and had done so efficiently, which was the main paradox for the company. It was obvious to the record labels that online distribution was hither to stay. Napsters name and assets were purchased by a company called Roxio. Roxio was a company know for its CD-burning software. Roxio had intentions to relaunch Napster as a fee-based service. Napster was renamed Napster 2. in 2003. orchard apple tree was one competitor for Napster, holding 70 to 80 part of the online music market. Rhapsody holds 10 to 15 percent of the market, and Napster holds 5 to 10 percent of the market. The remaining portion is carve up among several different companies (Ferrell & Hartline, 2008). Napsters schema focuses on being a subscription-based revenue model. Computer users could download as a good deal music as they wanted for a fee of $14. 95 per month. Napster created partnerships with BellSouth, Ericsson, and XM Satellite piano tuner as a means to concern with untapped markets.Napster partnered with Tower Records lacquer and launched Napster Japan in 2006. The company also began a partnership with Japans largest diligent phone company. About 90 percent of music downloads in Japan snuff it through wireless phones (Ferrell & Hartline, 2008). Napster has shown interest in being acquired by ano ther unshakable. Napster hire UBS Investment Bank to help with the sale. A bone up analysis structures the assessment of the endure between what a firm flock and cannot do (strengths and weakness), and the environmental conditions working for and against the firm (opportunities and threats).The SWOT analysis for Napster would consist of the side by side(p) (Ferrell & Hartline, 2008) Strengths Large music library expedient and easy to use Strong smear name and reputation Weaknesses Lack of compatibility set Limited areas of differentiation Opportunities New technologies descend in illegal file sacramental manduction Rapidly growing market Threats si sensitivey competition New technologies Potential for disintermediation looking back at the weaknesses listed in the SWOT analysis, one point that should be worked out is the pricing of Napster services. Napster is set up on a subscription-based model.If the price per subscription was cheaper, more nodes would signal to the site. Napster offers the same basic services as some of the other big call in the online music distribution industry. other area to refine would be the overleap of compatibility. Napster is not compatible with all MP3 players, specially the iPod. Those with an incompatible player will not want to purchase the service. New engineering is emerging every day. Napster should work on creating avenues that will allow music to be downloaded to wireless devices, such as the expert phone, PDAs and other handheld devices.Napster should put aside efforts to keep existing customers happy eyepatch also trying to expand the customer market. Keeping existing customers happy should continuously be a companys top priority. Having a solid heart of customers to build on is very meaning(a) to the stability and success of the company (Business KnowledgeSource. com, 2010). By keeping the existing companies happy, Napster could offer a free one month subscription for those members who deal be en loyal to company for a certain(p) amount of time. Flyers or inserts could also be placed in the packaging of MP3 players.This advertizing would entice users to connect with Napster for all of their music downloads. With this deal, new users could download up to five songs for free onward having to sign up for a subscription. Napster could offer discounts to new users for a certain period of time. For instance, a new user could get the first threesome months at a discounted rate before paying the regular price. There are many ways for Napster to expand their customer base. Finding out which plans work and which plans do not work is the key.