7601| Managing E-Business

1st October 2019

NAPSTER CASE STUDY

Kriti Bhatia
MBAFT-232

Today’s world enabled by the internet is an online world, a virtual world. Easy and speedy mails,
music, videos etc. are accessible. Napster was initially created between 1998 and 1999 by a 19-
year-old called Shawn Fanning while he attended Boston's Northeastern University. The
company enabled music tracks stored on other internet users' hard disks in MP3 format to be
searched and shared with other internet users.

Napster which started its P2P sharing music in college level has taken a giant shape for online
music downloadable sites. Youngsters can easily with one click download music of their choice.
Napster exploited its opportunities so well and became one of leading online music provider.
The whole journey of Napster was marked with ups and down. While they faced some
challenges, their success can be attributed unique features like Napster recommendations,
Napster Radio playlists based on the songs you have downloaded, swapping playlists and
recommendations with other users.

These features along with a healthy e-marketing mix enabled Napster to overcome challenges
and resist stiff competition from traditional and online players in the music industry.

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 Assessment of
Napster’s Marketing
Mix

Personalization by businesses today is in response to the need to

Personalization,
2P Privacy
recognize and identify a certain customer in order to establish relationships
by gathering all possible information to develop customized products and
services.
Customer Service,
2C Community
The Napster service offers subscribers on -demand access to over 2 million
tracks that can be streamed or downloaded as well as the ability to purchase
Individual tracks or albums on an ala cart basis.
Site, Security, Sales
3S Promotion Napster offers customizations and personalization’s to its users through radio
stations based on particular artists to recommendations is another unique
feature.

Privacy refers to how customer data will be stored and used. Given user
concerns around privatization, businesses must have an agreed policy on
access procedures and collecting information. Additionally, care must be
taken around existing regulations and legal aspects for collection and usage
of personal customer information.

Napster’s strategy to enter into online and offline strategic partnerships with
tech giants like Microsoft has enabled it to innovate continuously by
investing in technologies that these companies develop providing a private
and personalized environment for user experience.

According to the case study, Napster has data that over 80% of its
subscribers are over the age of 25, half of them have kids and 3/4 th of them
are male. Napster maintains this data with itself and perhaps uses it for better
customer insight generation while maintaining customer privacy.

Customer Service is usually seen as post-sales and cost center by many

businesses. It should however be treated as a long-term ongoing
relationship
product and service support throughout the lifecycle. It acts as an essential differentiator for
consumers today in a world where information has become commonplace to retain and establish
long-lasting relationships with customers.

Napster provides value to its customers who want their music and electronic devices to be compatible
by providing a list of all compatible devices on its website.

Napster participates in traditional and online marketing through radio, print and television advertising
along with placing advertisements on a number of websites and search engines to reach out to a
diverse set of customer base.

Community is characterized by the very nature of internet. The value of a network equals the
square of the number of components and hence the value of a network increases as the number of
members of the community increases. Encouraging interaction amongst the community as seen as
one of the key aspects of e-marketing today.

Napster also periodically licenses merchandising rights and resells hardware that its end-users use to
store and replay their music

According to the Napster, one of the primary objective is to continue to build the Napster consumer
brand as well as increase awareness of Napster brand identity. They aim to build a community of
music lovers where music is fun and affordable.

Site refers to the platform for interaction amongst the business and consumer. It should be easily
available and accessible to all consumers at every time. It is usually more than just a website and
should provide a seamless experience to the user from every device.

People are able to search for more music on the company's website than was ever possible at retail,
even in the largest megastore

Napster was having a very direct to customer distribution channel in which it require no physical
presence which lead to cut down the cost of distributional channel and it gives a cost effective edge
on traditional selling process.

Napster carries all its business online with no offline/retail presence. This allows them to become a
leading global provider of consumer digital music services. This also provides them the flexibility to
expand to other geographies easily with minimalistic capital costs and risks thus making it a successful
business model.

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Security is a critical component given that most transactions are carried out end-to-end on the
internet only. Security during financial transactions and customer information should be given utmost
importance and should always have customers in the loop for their information and awareness.
Security safeguards must be deployed and regularly updated.

Napster has believed in being innovative with its file formats by investing in new services and
technologies for different platforms like MP3 players, mobile phones etc., meeting different security
requirements of each platform.

Sales Promotion is the strategy deployed to achieve immediate sales goals in terms of volume.
Efficient use of digital technologies by marketers is the need of the hour to keep consumers engaged
and ensure business growth. New possibilities and approaches should be constantly evaluated and
developed.

The Napster business model allows users to download as many tracks as they can at a competitive
monthly fees. The payments can be made in advance via credit cards, promotional codes, gift
certificates, pre-paid cards etc.

Napster’s tie-ups with BestBuy and Target allows it to bundle its services with hardware manufacturers
thus creating a more widespread target group of customers.

Napster has used its marketing mix successfully to differentiate itself from its competitors. It
must constantly revise and modify its mix to remain relevant in the constantly changing world.
Its success can be summarized to the following attributes—

 P2P technique with great innovation

 Price was low in compared to CDs DVD's in Music stores
 Easy accessible and fast to download to get music at home
 More than 2 million sound track was available on the net
 Strategic partnership with software programmers Microsoft and Intel, H/w developers
Dell, Toshiba, IBM, retailers like Best Buy, Block Buster, Dixons Group etc.
 Low Operational cost
 Customer oriented services like
 Napster giving recommendation to their users for new music available
 Swapping play lists and recommendations with other users
 Napster was showing which music was downloaded recently