The other day I gave a poor review to Napster's web-based MP3 store. Jupiter's Mark Mulligan weighed in on the strategy and warned that Napster's MP3 store undermines its core business.

By adopting MP3 they are tacitly accepting that the best consumer proposition is with MP3 but that means they’re also implying that their core premium customers are having to tolerate the inferior proposition of DRM.

I'm not so sure about that. It may be possible for an a la carte store to coexist with a DRM-based subscription store. But it's tricky to mix rented and purchased. Placing an MP3 next to a rented track highlights the differences in their value propositions and gives the consumer a reason to ponder the shortcomings of DRM.

Michael Robertson (of MP3.com, MP3Tunes) gave it a far more favorable review. The main difference between our assessments was the number of tracks available.

I don't think the price difference between any of the major stores is meaningful, so it comes down to catalog size and consumer experience. Amazon has one click access and requires only a web browser to browse and shop. Napster matches these features, but has 3 times the catalog size. In addition Napster has music discovery methods beyond Amazon's "customers who bought this also bought this."

Two things. First, there are significant price differences -- especially with albums -- between Amazon.com and the other stores. (I will show that in a separate post.) Not only does Amazon.com's MP3 store have the digital equivalent to promotional, midline and budget pricing (as seen here at the Special Deals page) but the site lets customers search by price. Second, I pointed out yesterday that Napster's music discovery was hit and miss. While it does list more similar albums than does Amazon.com, its recommendations are not always good.

But this really comes down to the importance one places in the existence of six million tracks at a download store. I place far more importance on the popular and middle tail titles. While it's good to know that Napster is six million deep, it gives me little comfort knowing that I will rarely dip into tracks number three million to six million. In the vast majority of cases, tracks I search for are unavailable due to licensing reasons (Husker Du and the Warp Records catalog, for example). Many of the less popular tracks I want to buy can be found at eMusic for far less money (if you are a subscriber).

I have seen the surveys and studies that show consumers care more about selection than interoperability. Obviously people want to be able to find the music they want. But can you tell the difference between a store than has three million tracks from one that has six million?

To be continued...

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