UW gets in on deal marketing Napster
Seattle Times technology reporter
For officials at the University of Washington, Napster offered a deal too good to pass up.
Like other universities across the country, the UW found students were draining computer-network capacity in residence halls by downloading movies, songs and other files. The university wanted to offer students an alternative.
Seizing upon the downloading problem as a business opportunity, Napster is striking deals to give universities massively discounted memberships to its online music service. By passing on the memberships to students, Napster says, schools can cut down illegal file-sharing on their networks.
The UW signed a deal in June agreeing to pay only $2 per Napster user per month. Napster normally charges $10 per month for the service, which allows users to listen to and download music to their computers — although the music disappears once an account is closed.
Dell joined as a third partner, agreeing to pay the fee for 1,500 students in the residence halls as well as providing computer servers to power the system. The UW, figuring no more than 3,000 of its 5,000 on-campus students this year would use the service, agreed to pay for 1,500 more students.
At $2 a month for the eight-month school year, the UW had committed $24,000 to try the program through next spring. The money came out of a discretionary fund in the school's Computing and Communications Department.
"It's a fantastic deal to be able to buy into the Napster service at this discounted rate," said Oren Sreeby, director of client services in the department.
At the time the deal was announced in July, university officials wouldn't say how much the UW was paying because of nondisclosure agreements signed with Napster and Dell. The Seattle Times received the contracts after submitting a public-records request.
The UW contracts shed some light on the ground-level business strategy employed at universities by Napster, which rivals RealNetworks, Apple Computer and Microsoft's MSN Music in the digital music space. In return for the massive discounts, the UW has agreed to give Napster and Dell valuable opportunities to market itself to students on campus.
According to the contracts, the UW has agreed to exclusively promote Dell's DJ music player to its students — a move designed to give the player an edge over Apple's industry-leading iPod — and allow Dell to set up kiosks displaying its products in two locations.
The UW also agreed to help organize a launch event for the program, post information about Dell and Napster on its Web site and execute an e-mail campaign each semester telling students about the service and Dell's DJ.
Napster will be able to buy advertising space in the UW's student newspaper to publicize the service. The contract also asked the UW to look into getting Dell and Napster products into campus bookstores, including the Napster-branded clothing and the Dell DJ.
Finally, the UW agreed to coordinate student focus groups about the service and participate in a case study that Dell would publish on its Web site and in other marketing materials.
For its part, Dell agreed under the contract to buy $24,000 worth of Napster user licenses and install $53,000 worth of computer servers on campus to store the music library.
Sreeby said the contract was a boilerplate arrangement used at other universities — Napster has similar deals with a dozen other schools — and added that the UW may not perform every task it had agreed to in the document.
The university bookstore, for example, is a separate entity from the UW and doesn't sell Dell hardware, he said. The bookstore sells iPods and computers made by Apple, Toshiba, IBM and Sony.
Over the first year of the contract, Sreeby said, the UW will learn how the Napster service is perceived by students and what issues arise with offering these kinds of services.
"Financially, this allows the university to really stick our toes in this new body of water without making a huge commitment," he said.
Napster, for its part, gets a prime opportunity to market itself in front of an age group that is tech-savvy and interested in new music.
It had to persuade music labels to allow the steep discounts on its service at universities, said Aileen Atkins, senior vice president of business affairs at Napster. The idea is that if the students use the service in school, when they have plenty of time but not much money, they may become regular paying customers once they graduate, she said.
"It's a really good market for us," she said.
Dell saw the deal as an opportunity to address a need from the University of Washington, which has been one of its longtime customers, said John Mullen, vice president of Dell's higher-education business.
But does the strategy deter students from illegally downloading pirated files? Middlebury (Vt.) College partnered with Napster a year ago and has since seen a decline in student downloads from peer-to-peer services such as BitTorrent, said Doug Adams, director of the college's Center for Campus Activities and Leadership.
RealNetworks has a similar university partnership program, though at fewer schools than Napster, said spokesman Matt Graves. About 50 universities out of 3,000 or so are working with a music service in this fashion, with many hoping they can fight illegal downloading by offering a better alternative, he said.
"Universities are not ones to wave sticks at their students if this is a carrot-and-stick world," he said. "This is a carrot."
Kim Peterson: 206-464-2360 or email@example.com
Copyright © 2005 The Seattle Times Company