Napster Hurting Online Music Sales

Napster is back in the news as it tries to find a way to legally allow its users to share music files, and now comes research by PC Data Online that says Napster users eventually buy less music online once they get comfortable with downloading.

According to the research, home Web surfers who download music with Napster software initially purchase music online at the same rate as non-Napster consumers. However, after they become adept at downloading music, they purchase much less music through online vendors than non-Napster users. PC Data Online’s data comes from its buying meter, which tracks the purchasing behavior of 120,000 US home Internet users.

New Napster users are just as likely to purchase music at cdnow.com after initially downloading Napster software. However, 90 days after downloading Napster software, consumers’ online music purchases plummet, although they visit online music retailers much more frequently.

“Apparently Napster users visit online retailers to get information about music, and then use Napster to download the music free of charge,” said Ann Stephens, CEO of PC Data. “Portable MP3 players and recordable CD-ROMs are simply too easy and too cost efficient not to use.”

As far as converting digital files to CDs, PC Data’s sales tracking service found that 2 million CD-RW stand-alone drives and another 3.5 million PCs with CD-RW drives pre-installed will be sold at retail this year. These drives are frequently used to burn music CDs.

The number of Napster users has more than doubled over the past six months to 18.7 million, or nearly 20 percent of the total online population, according to PC Data Online. Penetration among the primary consuming group, 12-24 year-olds, is more than 40 percent.

Media Metrix has also been tracking Napster usage, and reports that usage increased from 1.1 million users in February 2000 to 6.7 million users in August, a 506.8 percent increase. Napster usage grew more than 30 percent from July to August of 2000, to 6.7 million home users and 1.2 million work users.


US Napster Users, Home and Work
(thousands)
May ’00 June ’00 Jul ’00 Aug ’00
Total Online Computer Users Home Work Home Work Home Work Home Work
77,759 26,687 77,591 26,857 79,163 26,863 79,461 26,821
Multimedia Player Users 35,354 11,455 35,664 10,646 37,477 14,211 38,121 14,523
Napster Users 3,166 417 4,670 763 4,936 887 6,729 1,179
Source: Media Metrix SoftUsage Report

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