The downside risk is not because of increased royalty payments, it's that the number of new subscribers might not be enough to make up for the lower subscription fees.[/QUOTE Wrote: > > > My opinion is that Rhapsody is going to face two risks going forward: > > 1. My understanding of the formula as to how the record industry is > demanding royalty payments is that royalties will go UP as Napster > increases its subscriber base; and, > > 2. As subscriptions increase, Napster won't be able to keep up with > demand resulting in poor service. Just look at AT&T and its iPhone. > Its network in general can't support the demand for 3g service from this > phone. I see Napster facing stress on its servers causing an inability > to deliver. And if it goes to a "cloud" service, it will have to pay > increasing fees to the "cloud" provider. I really see this as a > black-hole for Best Buy, just like youtube has become a cash-burner for > Google. > > Google has been trying for quite awhile now to make youtube > self-sustaining however it has yet to create a viable model. Best Buy > doesn't have the resources of Google and if Best Buy sees that Napster > is dragging it down with no hope of a turnaround, it will cut it loose. > The concern is that along the way, Rhapsody will burn out first, leaving > no subscription service featuring on-demand songs, albums and artists. > > If Napster succeeds, then great. I believe in capitalism. However I > just have this dread that in the long-run this new model from Napster > may hurt the whole subscription model for this type of service, leaving > us with no Napster, no Rhapsody and nothing to take their place. I > don't find the playlists offered by Pandora, et al to be an equal > substitute for the on-demand experience I now get from Rhapsody (and I > assume from Napster too).
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