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Napster, Dell cash-in on student DRM tax

Britney Spears or buses?

It's right up there with all the big headlines of the day. London wins Olympics bid. Angelina Jolie adopts Ethiopian AIDS orphan. Prince Albert knocks boots with French-Togolese flight attendant and pops out a baby. Dell sells blade servers that can run Napster software at colleges.

In a more perfect world, we'd spend the next four hundred words, prattling on about Prince Albert or the maternal qualities of Angelina Jolie. Life, however, isn't fair. Instead, we're forced to explore how Dell and Napster scratching each others' backs garnered more attention than the children who must pay for their partnership.

While most stories today repeat verbatim Dell's news of a "hardware/software bundle" to accelerate the Napster service on college campuses, the real story goes unreported. There is no "special bundle". It's an elaborate cross subsidy for a service that tons of students don't even use.

(Meanwhile, away from college campuses, Dell and Napster appear to be subsidizing each other's products with a $50 rebate on Dell's MP3 players if you sign up for 4 months of the Napster service. So co-ed cuts aren't even all they're cracked up to be.)

Most outlets described the use of Dell servers and Napster software as a type of specialized bundle that will speed the pace with which a college can roll out music rental services to its students. A fantastic new package that will bring legal music to the masses! In reality, however, the special bundle is a myth. This is basic software running on a basic Xeon-based server. And this basic pairing will cost you. Dell needs to send in a services team to install the server blades and software, according to a statement about the Napster deal.

No, the truly special aspect of this partnership is the way Dell and Napster have ingratiated themselves on college campuses.

Student tax pays dividends

The University of Washington, for example, is featured in Dell's statement and will need to shell out a minimum of $35,000 for the servers (at list price) and then pay for Dell's services and the Napster monthly subscription for its 40,000 students. In return, "Dell will provide tools to help schools market the Napster service to students and will offer special prices on bundles that include one of Dell's three digital music players." And UW brags about being a willing part of this.

Having a music rental service for students might not seem crucial, but it is. Penn State was the first school to be Napsterized and equates hawking music at children with transporting them to class and providing them with computers.

"How does Penn State justify providing a service that some people can't use or don't want?" the school asks itself in a Q&A.

"Many services are provided at Penn State that are not used or desired by everyone. For example, University funds pay for the campus bus service, but not everyone uses it. Wireless service is available, but not everyone has the computer system requirements to use it. The computer labs are available, but many students prefer to have their own computer. Penn State needed to address the problem of illegal file-sharing, and this was the most efficient and cost-effective way to do so, while benefiting as many as possible" - or at least as many non iPod-toting, Windows users as possible.

We are talking about college here, so the latest Britney Spears video could be seen as mission critical to a teenage boy as doing his homework. On the other hand, Penn State and schools like it could be seen as having lost any sense of their duties as higher education institutions.

Napster's only real significant success has come on college campuses where schools have tended toward the rental model over iTunes' one-off purchase model. Despite a lack of market share, Napster has been aided at universities by strong political connections, mysterious grants for the purchase of hardware from unnamed vendors and discount subscription rates to win the schools' business. Apple, which makes about as much in one day off iPods as Napster makes in an entire quarter, has never needed to bend over and sacrifice so much to capture the student market. (It recruited an army of shadow people to do the dirty work instead.)

Now companies such as Dell have aligned themselves with Napster's "get them while they're young" strategy. What next? Will Dell require North Carolina to make sure all of its state schools charge students for a hideous Dell DJ?

Most of the schools that originally signed up for the Napster service did so on a one-year trial basis. We dug around a bit today and found that every single school has decided to run yet another one-year trial of Napster. Most of the schools will again provide the service for free this year, while promising to enact an unspecified mandatory charge next year if (wink, wink) Napster wins the contract.

The schools insist that forcing students to use Napster will save them from being sued by the RIAA. And so the music labels managed to create a fear business that software makers and server vendors can capitalize on while buses, books and gyms compete for funds.

Cross subsidies between vendors, dressed up as a munificence, may grab the headlines today. But is "Dell sells servers that run software" really a bigger story than "Students forced to pay for a music service they don't even use?" We'll find out tomorrow. Stay tuned. . .®

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