Report: Napster Downloads Fall 87 Percent Since February

If the file download numbers released Tuesday by Webnoize are any indication, Napster fans had better keep their fingers crossed that Napster's potential deal with MusicNet goes through.

According to Webnoize, Napster downloads fell 87 percent from February to May, dropping all the way from 2.79 billion music files two months ago to 360 million last month.

Webnoize said the drastic fall in Napster's download activity is the result of the filters the site implemented to block the transfer of copyrighted music files, in order to comply with a U.S. district court injunction.

"The filters are doing their job, and there's simply less content available to download," Lee Black, director of research for Webnoize, told the E-Commerce Times.

Users Bailing

The number of simultaneous Napster users has also fallen, but not as sharply as the number of downloads. The average number of simultaneous users was 844,000 in May, down 46 percent from the peak of 1.57 million simultaneous users in February.

"Consumers are still using the Napster application, but the way they use it has changed over the last three months," said Webnoize senior analyst Matt Bailey. "The Napster software on a user's PC is now being used to organize and play music stored on the hard drive, rather than as a means to access shared music."

But no matter how many consumers are still using Napster, they may stop using it altogether unless the company can provide them with access to additional content.

"Certainly they need to find content for their user base, which is dwindling under 1 million," Black said. "But it hasn't dropped as rapidly as its content has."

Back to School

Despite Napster's declining download rates and audience base, the news is not bad for the maverick company. The Webnoize report also indicated that the potential for strong growth still remains for Napster.

Over half of U.S. college students are willing to pay $10 or more per month to use Napster, suggesting the college market alone could generate over $400 million per year in revenues for the service, Webnoize said.

But only 4 percent are willing to pay upwards of $20 for the service, while 23 percent said they wouldn't pay to use Napster at all.

Still No Content?

The possible deal with MusicNet announced earlier Tuesday would give Napster legitimate access to the music of three of the five major record labels suing Napster for copyright infringement.

However, Black warned that the MusicNet deal still would not solve Napster's major content problems.

"MusicNet has licensing agreements, but not real content yet," Black said. "Rather than becoming a major technology player, (the MusicNet deal) certainly might position Napster into a more appealing acquisition because it offers the possibility of higher tier services."