Napster's 'rental' music service takes on iTunes

The company is putting $30 million in marketing behind a new Microsoft-backed portable subscription service.

Napster will open its long-promised portable music subscription service Thursday, which will make it the first company to put muscle behind a new music "rental" model aimed at undermining Apple Computer's digital music dominance.

The company said its Napster to Go service would go live Thursday, charging people $14.95 monthly for the ability to download an unlimited number of songs and play them on compatible MP3 players. The songs would be playable only for as long as the subscriber keeps paying for the service.

The company will kick off a $30 million marketing campaign for the service with a Super Bowl advertisement running this Sunday, aimed at contrasting the new offer with Apple's , a representative said.

Napster's new service, which has been operating in a limited "preview" format for several months, is the first major iTunes rival to take advantage of copy-protection software from Microsoft that expands the flexibility of music subscription services.

That software allows MP3 players to monitor a song and block access if a subscription has run out. Previously, most online music subscription services limited subscribers to listening to music on the PC.

Other services have plans to launch the portable subscription plans as well. Cdigix, a company that serves college campuses, said Wednesday that it would launch a portable subscription plan later this month powered by wholesaler MusicNet.

Even RealNetworks, a bitter rival of Microsoft in some arenas, plans to launch a new version of its Rhapsody music subscription service using Microsoft's new rights-management technology.

Analysts have said that a key stumbling block for the services will be the idea of paying an ongoing fee, along with the idea that the music is not owned like a CD. Indeed, Apple's chief executive, Steve Jobs, has dismissed the idea of subscription-based services, saying people want to own their music.

"I think this is going to be one shift in behavior that takes some time to really articulate in a compelling way to consumers," said GartnerG2 analyst Michael McGuire. "It sounds really basic, but you can't overstate the challenge in convincing people that renting is better than owning music."

That's where Napster's marketing campaign comes in. Dubbed "Do the math," the advertisements will note that filling up an iPod would take about $10,000 using Apple's iTunes store. By contrast, filling up a comparably sized rival player using Napster To Go will cost just $15 a month, the ad will say.

The marketing campaign will also promote MP3 players from Creative Technology, Dell, and iRiver, all of which are releasing portable devices compatible with Microsoft's technology.

Despite skepticism, the subscription model has been gaining some ground. RealNetworks said last week that it had more than 700,000 subscribers to its music services, and Napster said earlier in the month that it had 270,000 subscribers.

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