Will Napster 2.0 follow Napster 1.0?

Filed in archive Companies on January 23, 2006

Digital Music News reported good news, bad news for Napster. While Napster surpassed 500,000 subscribers, its financial losses continued with rumors of layoffs and a sale.

From the article:

"Napster has recently reported a subscriber base of 500,000, an announcement that may have been timed to counter reports of an imminent downsizing. The increase represents a 100 percent jump over subscriber totals at the same point last year. "Doubling our subscribers over the last twelve months demonstrates the mass market potential of our music subscription model and the powerful appeal of Napster to music fans who want it all," said Chris Gorog, chairman and CEO of Napster. The company also pointed to a total of 50,000 subscribers from its university programs."

"The development follows reports of impending layoffs, and a possible fire sale or liquidation ahead. Sources to Digital Music News first made the claims over the weekend. Those reports have been denied by Napster, though continued quarterly losses and Apple's dominance in the paid download market remain serious concerns. For the fiscal second quarter -- reported in November -- Napster posted net losses of $13.6 million. Previously, losses hit a record $19.9 million, though revenues have continued to climb in 2005. Meanwhile, Gorog pointed to a healthy "$100 million on our Balance sheet" in comments Wednesday, though a classic cash burn scenario could be underway. The company will present its most recent quarterly results on February 8th."