Napster boosts fourth-quarter revenue guidance on ‘robust growth in subscription service’

“Napster Inc., a provider of an online music subscription service, on Thursday raised revenue guidance for its fourth quarter ending March 31 to about $15 million from prior estimates of $14 million, citing robust growth in subscription service,” The Associated Press Reports. “Analysts surveyed by Thomson First Call are looking for the company to post quarterly sales of $14.05 million.”

MacDailyNews Note: Napster’s revenue forecast comes a day after Apple Computer said more than 300 million songs have been sold through its iTunes Music Store.

AP reports, “Chris Gorog, Napster chairman and CEO, said, ‘Since the launch of Napster To Go, we have experienced exceptional demand for all aspects of our business. Our new marketing campaign is already delivering strong returns by generating unprecedented interest in both our regular and portable music subscription offerings. A positive reception to compatible MP3 players from iriver, Creative and Dell is also fueling demand.'”

Full article here.

MacDailyNews Take: Quarterly sales of about $15 million? That’s all? Apple currently does $15 million in iTunes Music Store sales every 11 days. Could Apple flip on their iPod-compatible iTunes subscription switch at any time if Napster does all of Apple’s work for them and proves enough people want that option? What do you think?

[Thanks to MDN reader “jakee” for forwarding us the link to this article. A reminder: if you see a story you think should be on MDN, please use our Contact page to send the link and let us know.]

Related MacDailyNews articles:
Analyst: iTunes sales exceeding expectations, estimates $83.2 million in iTunes revenue this quarter – March 03, 2005
Apple shares slip 5 percent after Napster boosts revenue outlook; Napster shares rise 8 percent – March 03, 2005
Apple’s iTunes Music Store downloads pass 300 million songs milestone (with chart) – March 02, 2005
Napster’s math does not add up – February 28, 2005
Napster’s dirty little secret: changing subscription services into downloads is easy – February 18, 2005
AOL removes Napster pirate plug-in ‘Output Stacker’ from website – February 17, 2005
Napster feels the heat over flawed copy-protection scheme – February 17, 2005
Apple CEO Steve Jobs warns record industry of Napster To Go’s security gap – February 16, 2005
Users thwart Napster To Go’s copy protection; do the music labels realize the piracy potential? – February 15, 2005
Napster-To-Go’s ‘rental music’ DRM circumvented – February 14, 2005

58 Comments

  1. sounds like Napster should have a show on the Food Network…. cuz they’re obviously “cooking the books” !!

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  2. As much as I’d love to see Napster-to-go fall flat on it’s face, I don’t think us Apple enthusiasts should be so smug in writing them off. We need to treat all competition seriously. Napster-to-go has just launched, so the fact that it is showing promising signs and analysts are raising estimates is nothing to scoff at no matter how much it sucks.

    Remember analysts have been writing off Apple for years and look where they are at now.

  3. isn’t the napster subscription like $10/month?

    If you assume that all napster’s revenue comes from subscriptions, then $14,000,000 / 10 = 1.4 million monthly customers.

    Granted, not all revenue is subscription-derived, but thats still a lot of customers.

    What napster didn’t say is how much overhead they have to give to the music companies to allow people unlimited access.

  4. Good point “let’s not be smug.” I don’t like the idea of renting my music and I would certainly never use an iRiver player, but for PC users who are looking for alternatives to Apple, paying about the price of a cd or $15 a month for an unlimited music library could be enticing.

    Apple needs to treat the competition with respect to remain the leader in this infantile market.

  5. Again, MDN’s comments are asinine and completely unnecessary. The point is that Napster has raised their expectations, not that their revenue is dwarfed by the almighty Apple. I expect more inteligent comments than your run of the mill PC forum.

  6. MDN’s take is pretty accurate. $15 million in sales is nothing. Take out what the labels are asking and any overhead they have and the $15 million in revenue will translate into a net loss. Considering how Napster is trying to go head to head with Apple, even touting its “superior” subscription service, the fact that what they consider “rubust growth” is what Apple takes in 11 days reveals a lot about the demand for their service.

  7. Correction – I think the Mac community needs to treat the competition seriously, Apple has said nothing that I’m aware to write off the competition.

    In fact, I think if Apple offered a similar program with iTunes where you had the option to either buy a song for 99 cents (and own it,) or rent unlimited songs for $15 a month it would probably do amazingly well.

    Some may not like it, but I don’t think the Napster-to-go idea is all that bad. Sorry.

  8. they raised it on the assumption that all those signing up for the free 2 week period or those that heard about circumventing the DRM on Napster-to-go service would stick around after 2 weeks or a month or two..

    retention of subscribers is the key to their business plan

  9. Cost of getting new subscribers? Gorog said $140 each at the conference call, subscribers need to stay subscribed for 18 – 20 months for NAPS to break even.

  10. King-Alvarez, the point is that $15 million in sales may be nothing now, but signs are showing that the service may do well and could potentially be serious competition for iTunes down the road.

    Napster-to-go has only been available for a couple of weeks, so $15 mil isn’t a bad start.

  11. “Take out what the labels are asking and any overhead they have and the $15 million in revenue will translate into a net loss. “

    And iTunes doesn’t suffer from similar overhead? It’s no secret labels pillage online music providers, both subscription based and pay-per-song.

    Regardless of MDN’s accuracy, the comments i’ve seen come out of MDN lately are rather off-topic and immature.

    I can garantee Apple isn’t laughing it up (no business would in their right mind would), so why should we?

  12. Anyone remember DIVX? The failed Circuit City/MPAA subscription/pay-per-view DVD service in the late ’90s? Napster 2.0 is the DIVX of this decade. It will be dead and forgotten before too long…

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