Napster's loss could be Gnutella's gain

Ever-popular Napster faces loss of half its audience

Napster will lose half of its European fanbase if it moves to a subscription model, claims Internet measurement firm Jupiter MMXI.

Analysis of Napster's audience shows 50 percent are under 24. The other half of Napster's user base, who tend to be wealthier, will probably be happy to pay for music, while the younger audience will not, asserts Jupiter MMXI.

Music analyst with Jupiter MMXI Mark Mulligan believes it is crucial to Napster's future success that it retain its younger audience and suggests a radical plan to keep them on board. "They should continue to offer a free service but must make it less appealing, perhaps with lower quality audit, limited content and advertising," he suggested.

Mulligan also warns that Napster copycat services such as Gnutella could be about to gain five million ex-Napster users if the pending court case results in shutting the service down. Rather than solving the problem of free Net music such a decision would open up a music "grey market", said Mulligan. "It is merely sending the problem elsewhere."

While Napster risks alienating its audience as it scrambles to befriend the traditional music labels, law experts point out there is an even bigger conundrum facing the industry. Napster has recently offered $1bn to the industry as a sweetener to allow it to pass on copyrighted material to its users. Now that the legal battle is coming to an end, it is time for all sides to get their heads together and work out how much that intellectual property is worth.

"It is going to require a radical shift," says Kiran Sandford, partner of the IT group at law firm Taylor Joynson Garrett. "There is no existing business model that caters for the value of intellectual property."

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