Naspter Responds To Hypebot’s Criticism But Still No Mp3 Plans
Last last week we were critical of Napster’s warning to investors that incompatibility of their downloads with the iPhone would stunt sales. After all isn’t this the same battle they’ve been fighting with Apple
since iTunes was launched?
Today a Napster spokesperson shed some important light on the company’s position which we’re publishing in full below. But they also told us that Napster would only begin selling universally compatible DRM free mp3’s – in our view the most realistic way to compete against Apple – "at the point that most tracks are available in that format".
In other words selling the several million DRM free tracks from EMI and hundreds of indie labels that constitute about 30% of domestic sales alongside protected WMA tracks is not yet in Napster’s playbook.
On the the original investor warning the spokesperson wrote:
"On behalf of Napster, regarding your story on the potential impact of the iPhone on the Company’s business, we must say that we’re pleased to know potential investors are reading Napster’s recent 10K filing. We would, however, like to put the information in the proper context.
Napster has consistently acknowledged that incompatibility with Apple’s iPod products is a "risk factor" in its SEC filings, a situation the Company shares along with the many other digital entertainment companies to which Apple refuses to license its FairPlay DRM software. With the recent launch of the iPhone this language was simply updated to include this new Apple product." (continued)
‘To lend some perspective to the relative impact of this update though, by Apple’s own projections the iPhone will claim approximately 1% of the music-enabled mobile phone market, with the vast majority of that market comprised of products that are WMA DRM compatible, creating an enormous addressable install base for Napster.
While no one can predict the future performance of individual players in the digital music market, we welcome the opportunity to discuss Napster’s strategy, as well as any other aspect of the Company’s business; and particularly hope that when planning to include comment from a company spokesperson you use us as a resource.
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In the meantime, we also invite you to peruse the 10K filing of Napster, as well as other companies in the digital entertainment industry to learn just how thoughtful and detailed each company is in informing potential investors of risk factors that could affect their investment in the company’s stock. A complete copy of Napster’s 10K filing from June 6, 2007 can be found at: http://investor.napster.com/sec.cfm."
