TV-PGFebruary 19, 2004: Napster makes with the pink slips; is Apple's swiping of the HP tie-in to blame? Meanwhile, word finally gets out that winning Pepsi caps are visible by tilting the bottle, and Apple blows $300 million to get completely out of debt...
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The Cat On Life Support (2/19/04)
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Well, it's not like anyone with a few active neurons to bump together couldn't see it coming, but it looks like the relaunched Napster just isn't wowing the crowds despite having the "biggest brand in the online music business." Small wonder, since Napster 2.0 "improved" upon its original illegal incarnation by drastically reducing the selection of songs available, charging money for what used to be free (at least in the eyes of the people who used Napster to steal music in the first place), and trading its Robin Hood image for a business plan based on funnelling cash to Microsoft and the RIAA; so much for the outlaw mystique of the vaunted Napster brand. The most obvious sign that things were getting hairy down Napster way (well, other than the finances, of course) came a few weeks back when Napster CEO Chris Gorog got so terrified and desperate that he actually publicly warned music executives to "stay off the Apple platform."

To be fair, Napster is actually doing better than we expected. Faithful viewer bo points out a Mercury News article which claims that Napster is selling "about a quarter the number of downloads from their artists as Apple's market-leading iTunes store," which is an improvement from Napster's launch week when it had only sold a fifth. Nevertheless, "Napster lost $15 million in its first two months of operation," "top executives have left the company" (its president, its CFO, its veep of programming, its head of corporate communications, a "key board member," etc.), and it started handing out the pink slips yesterday as a way of "eliminating redundancies in the organization"-- which doesn't bode well, given that the entire Napster organization and service is fundamentally redundant in the first place. And yet as late as last week, Gorog was still going on about how "the extraordinary value of the Napster brand" should kick in any minute now and shower investors with riches. That darn cat!

So when Napster finally burns through the last penny it can con out of gullible investors and the whole thing collapses in a flaming wreck, what will be the single biggest factor that contributed to its demise? (Aside from a tragically flawed business plan that relied solely on using brand loyalty to persuade music pirates to start paying money to Bill Gates and the recording industry for a narrowly constrained selection of copy-protected music, we mean.) It's tough to say, but we certainly found it noteworthy that the HP-Apple partnership that will put iTunes on the desktop of every Hewlett-Packard and Compaq home PC (and allow consumers to purchase rebranded iPods in a delicate shade of corpse-blue) was originally supposed to be an HP-Napster partnership instead.

Yes, according to the Merc, HP had even accepted payment in exchange for sticking Napster on all its PCs, but then "suddenly-- and without explanation-- returned Napster's $250,000 check and canceled the agreement." Two months later, Carly Fiorina was gushing to the press about how the iTunes Music Store was by far the best downloadable music option out there, the iPod was the portable player equivalent of calorie-free pizza delivered by the Second Coming, and HP had entered into an historic partnership with Apple to provide both to all HP customers so they wouldn't have to dork around with other lesser products and services. For example, one whose logo just happened to be a cat wearing headphones.

And gee, despite another influx of $22.5 million in investor funding last month, six weeks after the fizzled HP-Napster tie-in had turned into an HP-Apple team-up instead, Napster makes with the layoffs. Coincidence? Well, yeah, probably. But it's still pretty neat.


 
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For Once, Tilting WINS (2/19/04)
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Speaking of cats, one just got out of the bag on the Pepsi-iTunes giveaway, so we suppose it's finally safe to talk about this. See, before the promotion had even officially begun (but after the specially-marked bottles had already started appearing in stores), faithful viewer Jeff Melrose was the first to inform us way back in January that when the Universe's Cosmic Ice Cream Parlor was doling out that intangible creamy goodness known as "attention to detail," Apple apparently got a double-scoop while the Pepsi folks had wandered off to play Pac-Man. Get this: while only one cap in three is a winner, you can actually spot which caps pack free songs and which ones brand you a big loser without actually purchasing and opening the bottle.

How, you ask? Well, you could always drag along a psychic or use X-ray vision, but the most efficient technique involves the miracle of something called "tilt." That's right, people, evidently no one at Pepsi bothered to check whether customers could see the undersides of the caps through the side of the bottle just by looking. Memo to Pepsi: Duh.

People who figured this out suddenly boosted their chances of winning from 33% to a sure thing. And we didn't much care for the idea of Apple's first big iTunes promotional tie-in crumbling into a massive loss for the company shelling out the cash (even though it was said company's fault in the first place), because if word gets out that Pepsi's 100 million song giveaway was a huge money-loser, that might scuttle the chances of any other large-scale iTunes promotions ever seeing the light of day-- like that long-rumored McDonald's promo, which, if it indeed ever came to fruition in a form as originally reported, could add as much as a billion dollars to Apple's revenue. We also didn't much care for the possibility that every time we'd go to buy a Sierra Mist, all the winners would have already been cherry-picked out of the cooler by tilters. And since we have absolutely zero journalistic responsibility to the world at large, we sat on the info and waited until someone else decided to blab.

Now, though, word of The Tilt is all over the 'net like a rash, Pepsi is mortified, Apple is ambivalent (sure, it might be bad news for the prospects of future tie-ins, but it means that Pepsi's going to have to pay for a lot more songs in the short-term), and we can finally weave elaborate theories about conspiracies and coverups that tie The Tilt to the constant stream of messages we get from viewers wondering why they just can't seem to find iTunes bottles of Pepsi-- winners or otherwise-- anywhere at all. Remember when we noted that game bottles were seemingly much more prevalent on the eastern side of the country? Well, we couldn't help wondering if maybe shipments of the game bottles went out to the east first, and then someone at Pepsi noticed The Tilt and halted shipments before distribution had worked its way westward.

It's not impossible, right? And it fits in rather well with an unsubstantiated report from an anonymous faithful viewer who claimed that, about a week ago, he spotted a Pepsi delivery guy unloading a shipment down at a local convenience store. It was two weeks into the promotion period, and yet the delivery truck was packed full of Pepsi sans yellow caps. The viewer asked why there weren't more iTunes bottles around town, and allegedly said Pepsi guy replied that "he didn't think they were getting any more because something went wrong. It was costing the company a lot of money." The Tilt strikes again!

We aren't at all sure whether Pepsi can just stop shipping game pieces, since the company has already published the odds of winning, the number of bottles, etc., but we are sure that this whole situation is a pretty major screw-up and someone at Pepsi is quite possibly working on his résumé right about now. Here's hoping that the news doesn't indeed put the kibosh on future song giveaway deals; after all, the whole promotion would have worked smashingly if someone at Pepsi had just tilted a freakin' bottle before the first shipments went out. Who says attention to detail isn't important?


 
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The Star-Spangled Debtor (2/19/04)
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What's more all-American than mom, baseball, and apple pie? Well, plenty of stuff, actually, especially if the best apple pie you ever tasted was baked and served à la mode by your Hungarian mother to celebrate the latest win by the Nippon Ham Fighters, but specifically, we're talking about debt. Good ol' debt! It's debt that keeps this country ticking. Without debt, we'd actually be solvent, and we all know how painful that can be. So, three cheers for debt! Go buy something with plastic today! Finance charges and interest make the world go 'round.

However, apparently not everyone agrees. Faithful viewer mrmgraphics pointed out that 99Mac has posted an email message from The Stevester Himself to all Apple employees, revealing that the company has just blown nearly a third of a billion dollars-- not on some new company to absorb, not on a few extra Gulfstream jets, not even on 3.1 billion mini vinyl frogs. Instead, Apple paid $300 million in cash-- to get out of debt. That's right, kiddies, the billion dollars of debt that Apple had so diligently amassed in the years leading up to Steve's return is now gone. Steve actually frittered it all away in just a little over six years. As of now, Apple is that most anti-American of all things: debt-free.

This isn't exactly news, since CFO Fred Anderson had mentioned during last month's earnings conference call that Apple intended to pay off its last remaining debt this month using a $300 million chunk of change from its cash stockpile, but we figured he must have been joking, especially in light of the announcement of his impending retirement-- just a little parting giggle, right? But no, he was serious, and now Apple carries less debt than most U.S. house pets. Shameful.

Well, if Apple sees the error of its ways and decides to come back and join the rest of us in America, we're willing to do what we can to help. It'll be hard on us, but for Apple's sake, we'd be willing to donate the debt from our mortgage on the AtAT compound-- let Apple pay it off and transfer the debt to the company's books. We've also got several thousand dollars in outstanding student loans we suppose we can give up, and a few credit card accounts we can allow Apple to pay in full with borrowed money. But not the car loan-- never the car loan! We need the debt from that car loan; without it we'd feel like traitors to our country! They can't have it! Never! Oh, okay, what the heck.

No worries, folks; if Apple does assume all of our outstanding debt, we'll be sure to run out and incur plenty more right away. After all, it's the American way.


 
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