Kazaa May Benefit From New Apple App Rules

Here's a novel theory: Despite the doom and gloom talk in the subscription music sector now that Apple may take a 30% cut of in-app sign ups, one stock analyst says Kazaa may actually benefit from the new rules. So far, Kazaa has been overlooked in this debate, but John Gilliam thinks the on-demand streaming service may be set for a comeback.

Why?

Four reasons: name recognition, billing structure, unique marketing approach, and independence from Apple. At the peak of Kazaa, over 800 million people downloaded it. This, Gilliam says, gives the service a strong consumer brand.

Kazaa also allows users to sign up using their mobile phone number.

Another aside Gilliam makes is that Altrinsic (Kazaa's parent company) owns a top ranked digital search marketing agency and affiliate-marketing network.

These resources could allow Kazaa to reach a wider market at a low cost.

Lastly, Kazaa hasn't yet used the App Store as an acquisition channel. Thus, it doesn't face the challenge of having to deal with existing consumer expectations.

So what gives?

Is Kazaa (somehow) in a better place than rivals like MOG or Rdio? Gilliam suggests that may be the case. Currently, the service is still in Beta, but it has already gained around 75,000 subscribers; 75% of which use mobile billing.

This all sounds well and good, but just because Kazaa isn't as harmed by the new in-app rules doesn't mean that it has any chance of becoming a leader in the subscription sector. Napster has a brand name too, as well as parent company Best Buy, and that hasn't allowed it to fair much better than its rivals have. And we all know what happened to Thumbplay despite its $41 million in investments.

Unless Kazaa puts some serious money into feature development and consumer experience, all the digital search and affiliate marketing can't hide the mediocre service that lies beneath. Like I said, it's a good theory but a novel one at best.