“The original big dog in digital music has turned into a pussycat. Roxio’s reincarnation of Napster as a subscription music service has produced millions of dollars in losses, shakeups in the executive suites, and now job layoffs, according to the San Jose Mercury News. A spokeswoman said the company was ‘eliminating redundancies in the organization,’ and did not specify the number of jobs cut, the report added,” Frank Barnako reports for CBS.MarketWatch.com.
“Part of the reason for troubles at Napster may simply be that the online music business is tough. Profit margins are slim. Napster appears to be the fourth largest music service with an estimated 90,000 subscribers, the report said. Insiders at two of the major music labels told the News that Napster sells only about 25 percent of the tracks that Apple Computer’s iTunes Music Store does. ‘I think it’s a very competitive market with very ugly economics,’ commented Steven B. Frankel, managing director of Adams, Harkness and Hill, a Boston investment bank,” Barnako reports.
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