Napster Launches Free Music Site

One industry analyst said it is too early to say whether Napster.com will entice music fans to sign up for the service, and chip away at Apple (AAPL Quote)'s dominance of the online music business.

"As a tactic, I think it's a good one," said Mike McGuire, a vice president at Gartner. Analysts at Gartner don't own stock in the companies they cover.

The song-linking feature "is a good way to introduce (other people) to the service," McGuire said. "Getting them to actually cross the chasm to paying $9.95 or $14.95 a month -- it's unknown about how well that is going to work. They also have to get the across the value of a subscription service."

McGuire also said Apple has a big advantage with its wildly popular iPod, which links up seamlessly with the iTunes Music Store.

Song-linking is not a new idea. Several years ago, Seattle's Shared Media Licensing developed a similar application, called Weed, that permitted users to listen to full songs three times before purchase and subsequently share the music with others. If friends buy a track, the person who sent the song also gets a cut of the sale.

On April 6, Napster updated its revenue guidance after boosting subscriptions and said its loss for the quarter would be less than anticipated. Napster will announce its fourth-quarter results on May 17 after the market closes.