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Others, however, don't share my enthusiasm. At the half-year mark, announced earlier this week, Napster Inc. had just a tad over 700,000 subscribers, down about 50,000 from a quarter earlier. Revenue for the second quarter of 2008 was flat and totaled $30 million. The company lost money. Again. Last month, Napster's market cap fell below its cash on hand. That prompted speculation that an eager hedge fund might want to seize the company just to dismantle it, or that it's ripe for a takeover by everyone from rival RealNetworks Inc. to Comcast Corp. Napster management has struggled mightily with a business model, and some analysts have long since written the company's obituary. Napster isn't the only subscriber music service out there, and that's a big part of the problem. Rhapsody, a joint venture between RealNetworks and MTV, has more than twice as many subscribers and far better name recognition. But Napster can't only be explained away as a case of a weak second place. Some critics believe Napster's -- and Rhapsody's -- underlying premise is flawed because conventional wisdom states flatly that music is primarily the domain of youth and anybody younger than 25 won't pay. Period. True enough, Napster, at $12.95 a month, is now competing with not only illegal downloads, but all sorts of online, music-oriented social networks that are free. While these services don't allow listeners to craft exact playlists of their choosing, offerings are close enough to satisfy many young listeners, especially those into discovering what music turns on their peers. Again, that's one factor, but not the only one. Napster is a late adopter of restriction-free MP3 downloads. The company finally made the conversion in May and puts great public stake in revenue possibilities, but frankly, it's hard to see Napster sprinting past Apple Inc. What Napster hasn't been able to do is craft both unlimited selection and ubiquity, and that's the real Holy Grail in music delivery. It offers a portable service for more money, but it's clunky and unwieldy and not compatible with an iPod. Last year, as I was about to take off for Europe, I discovered that I had failed to recalibrate my MP3 player with the Napster server, leaving me with an eight-hour flight and no music. I cancelled Napster To Go when I returned. Napster is now pushing its service through mobile telephones and has a deal in place with AT&T Inc., as well as Britain's O2 and Japan's NTT Docomo. While this may not be enough to save the company, it does provide Napster with a glimmer of hope. It also provides a glimpse of what the future may be like. Like it or not, mobile phones will become portable entertainment centers. They're already attached, pretty much permanently, to the ears of many. The current push on individual music downloads, however, doesn't make sense to the subscriber, as the songs usually duplicate what's on an iPod. So, why not provide any song imaginable to fill in dead time and roll that subscription price into monthly charges? This becomes the mobile equivalent of satellite radio, only vastly more powerful. - Matt Miller CategoriesComments
From: he who says,
The fat cats at Napster (CEO, President, etc) all made their money back when Napster was at $20+ a share. Now that it's DOA at $1.50 they don't give a hoot about the company. The CEO has time and again promised the world at earnings calls and failed to deliver OVER and OVER again - he's a joker that blames everyone else but himself. Fire the man and let someone else take a spin at telling the truth and running the ship.
Posted on:
August 20, 2008 8:44 PM
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Let me say up-front: I'm a huge Napster fan. No, I'm not talking about the mother of all music pirates, but Napster, the legitimate sequel. This all-you-can-listen-to subscription music service is the nearest we have to a celestial jukebox. It's instant musical gratification, 6 million songs at your fingertips, as long as your fingertips are tapping on computer keys. You name it. They got it. I was an early subscriber, and I remain just as eager more than three years later. 
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I, too, LOVE the Napster service. I cannot understand why most families have not adopted its 3-computer/3-portable subscription to accommodate an entire family's music consumption needs. That's how we do it. But for some unknown reason, people just "don't get it." I think the company needs new management who knows how to market to the right people.