Record Label and Napster S Strategy

Napster, developed in 1999 by Shawn Fanning, is a program that allows practice of medicine to be traded over the internet. People were able to touch high quality digital copies of music geniusings over the internet using Napster. Napster did not store the recordings, however. It allowed its members who were logged onto the good to choose from an index of songs. Napster was unrivalled of the most popular spots on the internet. The site had some 15 one zillion million drug users in a familys time. Many college students downloaded so many songs that many colleges had to block the site from their system.A year after its launch, Napster was sued by the Recording Industry Association of America (RIAA). The RIAA represents major recording companies. The RIAA claimed that copyright laws were violated by Napster for allowing users to swap music recordings for free. The RIAA want to stop the downloading of copyrighted songs, as well as damages for garbled revenue. Song swapping ha d cost the music application more than $300 million in lost sales. A few months later, Napster was sued by a serious metal band, Metallica, and rap star Dr. Dre. They were suing Napster for copyright violation.In 2000, a judge granted the request of the RIAA and ordered Napster to stop making copyrighted recordings available for download. This would involve shut Napster down. Napster was granted a last-minute reprieve until the lawsuits could be attempt in court. Despite its many claims, Napster was found guilty of direct infringement of the RIAAs musical recordings. The conjunction was ordered to stop allowing its millions of users to download and share copyrighted material without properly compensating the owners of the material (Ferrell & Hartline, 2008). Napster later inflateed $1 one thousand million to the recording industry to make up ones mindtle the lawsuit.Napster also agreed that $150 million would be paid annually for the first five years to Sony, Warner, BMG, EMI, and Universal, and $50 million annually was allotted for independent labels. The recording industry refused the offer. The industry wanted Napster to shut down for good. Napster tried many times to via media with the recording industry, but to no avail. Napster filed for Chapter 11 reorganization in 2002. The political party also tried to reach a deal with Bertelsmann AG, their strategic partner. A few months later, a Delaware judge blocked the sale of the confederacy to Bertelsmann.Napster hence laid off nearly its entire staff and proceeded to convert its Chapter 11 into a Chapter 7 liquidation. Many music labels were dabbling in online music distribution. Napster had clear beaten them to it and had done so efficiently, which was the main problem for the company. It was obvious to the record labels that online distribution was here to stay. Napsters name and assets were purchased by a company called Roxio. Roxio was a company known for its CD-burning software. Roxio had intentions to relaunch Napster as a fee-based service. Napster was renamed Napster 2. in 2003. apple was one competitor for Napster, holding 70 to 80 per centum of the online music market. Rhapsody holds 10 to 15 percent of the market, and Napster holds 5 to 10 percent of the market. The stay portion is divided among several different companies (Ferrell & Hartline, 2008). Napsters strategy focuses on being a subscription-based revenue model. Com sender users could download as lots music as they wanted for a fee of $14. 95 per month. Napster created partnerships with BellSouth, Ericsson, and XM transmit Radio as a means to connect with untapped markets.Napster partnered with rise Records Japan and launched Napster Japan in 2006. The company also began a partnership with Japans largest mobile phone company. About 90 percent of music downloads in Japan occur through wireless phones (Ferrell & Hartline, 2008). Napster has shown wager in being acquired by another riotous. Napster hired UBS Investment avow to help with the sale. A SWOT analysis structures the assessment of the fit in the midst of what a firm can and cannot do (strengths and weakness), and the environmental conditions resolveing for and against the firm (opportunities and threats).The SWOT analysis for Napster would consist of the following (Ferrell & Hartline, 2008) Strengths Large music program library Convenient and easy to use Strong brand name and nature Weaknesses Lack of compatibility Pricing Limited areas of differentiation Opportunities New technologies Decline in illegal file sharing Rapidly growing market Threats mightily competition New technologies Potential for disintermediation Looking back at the weaknesses listed in the SWOT analysis, one point that should be worked out is the pricing of Napster services. Napster is set up on a subscription-based model.If the price per subscription was cheaper, more customers would subscribe to the site. Napster offers the akin basic s ervices as some of the other big label in the online music distribution industry. Another area to refine would be the lack of compatibility. Napster is not compatible with all MP3 workers, especially the iPod. Those with an incompatible player will not want to purchase the service. New technology is uphill every day. Napster should work on creating avenues that will allow music to be downloaded to wireless devices, such as the smart phone, PDAs and other handheld devices.Napster should put forth efforts to keep existing customers happy while also seek to expand the customer market. Keeping existing customers happy should always be a companys top priority. Having a solid encumbrance of customers to build on is very important to the stability and success of the company (Business KnowledgeSource. com, 2010). By keeping the existing companies happy, Napster could offer a free one month subscription for those members who have been loyal to company for a certain union of time. Flyers or inserts could also be placed in the packaging of MP3 players.This advertising would entice users to connect with Napster for all of their music downloads. With this deal, new users could download up to five songs for free in advance having to sign up for a subscription. Napster could offer discounts to new users for a certain period of time. For instance, a new user could get the first three months at a discounted rate before paying the regular price. There are many ways for Napster to expand their customer base. Finding out which plans work and which plans do not work is the key.