Filed under: Good news, Products and services, Competitive strategy, Apple Inc (AAPL), Amazon.com (AMZN), Marketing and advertising

Napster (NASDAQ: NAPS) announced Tuesday that the company has removed all digital rights management technology from its store and will begin selling unprotected MP3 files immediately. Napster has also gained the support and backing from all four of the major record labels on top of existing deals with independent labels. This is something other stores like Apple (NASDAQ: AAPL)’s iTunes Store and Amazon.com (NASDAQ: AMZN)’s MP3 Store have yet to secure.

According to Billboard, Napster will have a similar deal with Sony BMG that it has with Amazon where the label is the seller and the store only receives a commission. In addition, Napster’s six million song catalog far outpaces that of any other store. Amazon comes close, but is four million songs behind. Unlike iTunes, though, Napster will not offer a service to allow users to upgrade existing DRM-encoded files to the new DRM-free files.

Napster executives, however, remain committed to the subscription-based model that the store has operated under for the past few years, hoping to utilize the new MP3 files as gateways to introducing customers to subscriptions. Billboard contends that Napster “is gambling that the proliferation of Internet-connected devices — such as mobile phones, home stereos and eventually vehicle radios — will some day convince music fans that a monthly subscription to access all the music they want from any device is more compelling than buying it.”

At the end of the day, another digital music store offering DRM-free tracks is a good sign for digital growth, digital stores and the music industry. This is particularly evident here since all four major labels have signed on to offer Napster quite a massive cache of tracks. The continued hopes for transitions to subscription services might be the next prolonged discussion, as the largest retailer iTunes and Apple have continued to steer clear of that model.

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This entry was posted on Wednesday, May 21st, 2008 at 5:20 pm and is filed under Companies Competitive Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.