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Napster to give away music players

MP3 device is the lure to get people sign up for a one-year subscription.

Roxio's Napster said Wednesday it is offering free digital music players with a one-year subscription, in the latest bid by an online music service to lure consumers with promotional offers.

Napster, which was transformed into a legal service after turning the music industry on its ear with an unauthorized song-swapping platform, is now giving away MP3 devices to anyone who subscribes for a full year.

On its Web site, Napster said it would give consumers a Rio Chiba Sport portable music device, valued at about $130, if they sign up for the subscription, which is valued at $119.40.

The device features 128MB of storage capacity and includes a stopwatch, sports headphones and an armband.

Napster's Web site also said consumers can upgrade to a larger capacity Rio Nitrus by paying an additional $80.

The Napster offer marks the latest example of cross-promotions among competing online music services.

Sony this month announced a deal with McDonald's to give away free music downloads, while nearly every other major online music store--from Apple Computer's iTunes to RealNetworks' Rhapsody have announced joint ventures with consumer brands ranging from PepsiCo to United Airlines.

"This is another example of Napster trying to be creative to drive Napster subscriptions," said P.J. McNealy, analyst with American Technology Research.

However, McNealy said Roxio still faces some significant financial hurdles for the Napster service to break even.

"While Roxio has forecast up to $40 million in Napster revenue this year, we believe that they really have to reach close to $300 million to break even, and reaching that goal will likely not happen in the next 12 months," said McNealy.

Napster provides online music either through a monthly subscription model or through a la carte downloads.

U.S. consumers have visited Napster to purchase over 10 million tracks to date, according to the company.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.