Sean talks about the Napster ad. I agree, the subscription model is interesting.
It's a good start, but the fact remains that 1) Napster does not work with the iPod and 2) the iPod is the predominant portable music player right now.
That means that, in a relatively small market already, you're immediately excluding millions of users. Are you really expecting many of those iPod owners to go buy a new player after already dropping $300-500 on an iPod? Not to mention the obsession many of us have with the iPod.
Unless they pull a RealNetworks and get their songs on the iPod, I doubt it's going to have much of an impact vs. iTunes.
Yes, it might help with new purchases, but even then the iPod has a leg up due to name recognition.
Update: Kevin discusses the rent-to-own issue. Obviously, as discussed below, this is a matter of personal preference, but Kevin also points out another potential pitfall - that is, if Napster were to go out of business, you would lose your music.
Update: Apple is considering a subscription service. [via Furd].