Napster explores adding advertising to site

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Renegade Internet music service Napster may be singing a more traditional tune -- selling advertising on its site.

The San Mateo, Calif.-based company -- which has incurred the wrath of major record labels for offering free music downloads -- doesn't carry advertising currently. Napster operates as a clearinghouse, helping computer users download free music from other computer users' hard drives.

Napster has talked to a number of advertising sales companies and consultants, according to marketing executives. Among them is Michael Kassan, president of new media/e-commerce at Massive Media Group, a Santa Monica, company that sells digital download protection services to content providers and advertising sales companies. Mr. Kassan formerly was president of Western Initiative Media, now Initiative Media North America, one of the largest U.S. media buying companies.

"One of our primary beliefs is that advertising will play a significant role in the model of digital download of content," Mr. Kassan said. "We are a natural [for Napster], because we also understand digital distribution."

PRELIMINARY TALKS

Mr. Kassan said talks with Napster were preliminary, and there were no details as to how advertisers would work with the service. Napster executives did not return phone calls by press time.

In its present design, Napster's Web site is not particularly ad friendly: It is not a traditional, multilayered site and has a limited number of pages.

Still, advertisers could be attracted by Napster's growing popularity. According to Media Metrix, for the week of June 4, Napster posted an average of 422,000 unique visitors per day -- the most of any music Web site.

Napster's traffic has been fueled by an onslaught of media coverage of the company and other, similar music-download ventures.

"There would be advertisers clamoring to get on the site," said Stacey Herron, Internet music analyst for Jupiter Communications. Despite its young-skewing heritage, Ms. Herron said, the service now has broad demographics.

"It's not just college students; their moms are using it as well."

LEGAL TRAVAILS

For months, Napster has been involved in a legal tangle with the major record labels. In December, the Recording Industry Association of America filed a lawsuit in U.S. District Court in San Francisco for violation of copyright infringement laws; in April, heavy metal rock group Metallica also filed suit in the district court against Napster -- as well as Indiana University and the University of Southern California for facilitating the music downloads -- alleging racketeering and copyright infringement.

"[Napster is] still operating on [venture capital] money," Ms. Herron said. "When you are looking at legal bills, you have to start making some cash. Advertising makes perfect sense."

Along with taking on advertising, Napster is said to be in talks with record labels for distribution deals.

"It's inevitable," said Steve Abraham, global managing partner of PricewaterhouseCoopers. "It either gets shut down or gets legitimized."

Napster recently announced deals with 14,000 unsigned musical acts, whose work consumers could download without concern for copyright infringement.

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