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Analysis: Napster's Move to Ad-Supported Trial Should Boost Revenues

One of the main reasons I write about Web startups that charge fees for software and services is because I feel many of them will ultimately adopt, if not move over completely, to an ad-supported model. Consumers have shown time and again they would rather absorb advertising than pay for content, and I feel that has to continue. That said, it took a while for Apple to start selling ads on iTunes, and while I don't feel that's going to be the primary revenue source for Apple anytime soon, it will definitely expand over time. Today, a lot of news outlets are having fun with variations of the title "old is new again," when describing how Napster, badly in need of a revenue boost, has reverted to offering music for free--legally this time, but ad-supported. It's not completely free, mind you, but the interesting new deal now lets users listen to songs five times before buying. Nevertheless, the new option is sure to attract a lot more users to Napster, especially because sign-up is free and there's no obligation to buy. A boost in traffic will no doubt attract advertisers, but the question now is how competitors like RealNetworks' Rhapsody, Yahoo Music and Apple's industry-dominating iTunes will respond. Analysts who talked with Forbes.com really like the move, and so do I. In fact, I plan to sign up later to check it out.

Read the whole story at Forbes.com »

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