Napster Faces Stiff Competition

After acquiring Pressplay online music service in May 2003, Napster (NAPS) updated its service with value-added features and launched itself as a paid service under the Napster brand name. The subscription service enables fans to freely sample the world's largest and most diverse online collection of music and experience the largest number of features. This service allows users to legally play, download, and burn (copy) online digital music legally.

The company has marshaled support for its service from leading device manufacturers such as Dell (DELL), iRiver, and Creative Labs. Furthermore, Napster is targeting the music-enabled cell phone market. Partnering with Ericsson (ERIC), Napster has put together a demo of a wireless solution and is in discussions with major carriers.

Napster faces stiff competition because many big players have concentrated on the emerging digital music market. The company competes against RealRhapsody (RNWK), MusicMatch, Apple Computer's (AAPL) iTunes Music Store, and Sony (SNE) Connect in the U.S. The competition is likely to intensify with the entry of giants such as Wal-Mart (WMT) and Starbucks (SBUX) in this space. On the international front, the company is likely to face pressure from Apple, which has launched its music service iTunes in the United Kingdom, France, and Germany.

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