“Technology stocks showed strength in early trading Tuesday, with online music distributor Napster Inc. (NAPS) up $1.13, or more than 18%, at $7.28. Before the market opened, Napster raised its fourth-quarter revenue forecast to between $16.5 million and $17.5 million, and said it reached 400,000 subscribers. Other gains came from Apple Computer (AAPL) , Dell Inc. (DELL) and Sun Microsystems (SUNW),” Rex Crum reports for CBS MarketWatch.
Full article here.
MacDailyNews Take: In other words, Napster will now earn not only the equivalent of Apple’s quarterly toilet paper budget, but could now cover a small portion of Apple’s quarterly budget for moisturized hand soap, too.
Related MacDailyNews articles:
Napster is a joke – April 05, 2005
Mossberg: Apple’s iTunes Music Store vs. Napster To Go – March 18, 2005
Napster CEO Gorog: Steve Jobs ‘must be pretty frightened’ of Napster To Go – March 14, 2005
Apple’s iTunes Music Store downloads pass 300 million songs milestone (with chart) – March 02, 2005
Napster’s dirty little secret: changing subscription services into downloads is easy – February 18, 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
Napster CEO Gorog: ‘it’s stupid to buy an iPod’ – February 10, 2005
Report: Napster faces uphill fight to gain share, Apple prepared to run iTunes at a loss – February 10, 2005
Napster’s ‘iPodlessness’ doesn’t bode well for its future – February 10, 2005
$10,000 to fill an iPod? Napster’s going to end up with egg on their face – February 04, 2005
Why ‘Napster To Go’ will flop – February 03, 2005
Napster CEO: We’re ‘the biggest brand in digital music, much more exciting than Apple’s iTunes’ – February 03, 2005
wow, 400,000 suckers out there already?
In other news Apple had 400,000 people download 4 songs each TODAY for $.99 each or if they were like me for free from pepsi.
Are they profitable yet? Their numbers are fine and dandy, but if they’re still operating at loss, $1 mill may not be that grand.
I wonder if these include the colleges they have cut deals with? I would have to belive if it did that more then half would then be college students.
What will be interesting is to see if the numbers taper off when the kids go home for summer.
there really isn’t much logic somedays in stocks. The numbers behind NAPS just don’t add up. Profits, revenue growth, EPS, etc…
They have cash, and the cash burn is significant, not deadly though in the short term (thank the sale of Roxio to Sonic for the cash)
http://finance.yahoo.com/q/ae?s=NAPS
Things to consider are the subscribers. 400K is a lot but it’s not enough growth…Notice the range of “upgrade” on revenue. Even NAPS doesn’t know what type of retention they’re going to get in the coming months.
Let’s do a little math. That’s 130,000 new subscribers in let’s say 30 days. There are 9 months left in the year. That’s 1,170,000 new subscribers by the end of the year, plus the 270,000 they started with. That’s 1,440,000 subscribers on 01/01/2006. By their own figures that will cost them $210,600,000 in operating expenses. Add $30,000,000 in advertising this year for a grand total of $240,600,000. Now, let’s be generous and say they average 855,000 subscribers in 2005 at $15 each. That’s $12,825,000 per month, or $153,900,000 for the year. Subtract that from expenses of $210,600,00 and you get a net loss of $56,700,000, not counting salaries, executive bonuses, and stock options.
Somebody should tell these guys the NASDAQ bubble burst back in 2000. Investors don’t want to hear about losing more and more money on ever increasing market share anymore. As a subscriber, would you bet your music library on the survival of another Enron? When Napster gets flushed it will also be the sound of subscribers’ accounts doing down the drain, along with their music licenses. Bye-bye.
Does that even pay for their “Do the Math” campaign? Doubtful.
give the new subscribers 6 months to hijack all the music they want, then the numbers will start to drop. The funny thing is I think iTunes sells more a day then Napster does a Quarter, and this news will send Apple stock down a few cents because Napster is up, instead people could easily subscribe to this service for continual access, then purchase iPod compatible music from iTunes that they want to keep.
You know that once all these new subscribers steal all the songs they have downloaded they will just cancel their subscriptions. The only annoying thing is that there will be more and more WMA files on the P2P networks.
Napster needs to “do the math”…
They’re obviously losing money faster than they’re making it.
Uh oh, looks like Nappy learned to putt!
Look out crApple, this is a marathon not a sprint. Welcome back to the 80’s when you alienated everyone with proprietary hardware and formats. Everything old is new again.
The fall begins.
Oh, Jonny One Nut… you make me laugh…
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You’re right that it’s a marathon and not a sprint, but guess what? Apple has already reached Mile 5 while Napster is stumbling past Mile 1.
Good metaphor, except it’s Apple that’s doing the pulling away and accelerating.
Keep thinking that. That is exactly the kind of thinking that lost Apple the OS war. It will happen again.
Haha! Now that’s funny! It’s exactly because Apple isn’t “thinking that” that it’s in the position to begin with.
But delusion tend to blind you to the facts. Guess what? Apple iTunes is growing faster than Napster can add subscribers.
And let’s see Napster tell us its “churn rate” is. Or is that little fact too dangerous for the myth? What does Napster have to hide?
Even haters like Jonny are hanging around in Mac Forums… lol… I love it.
Napster is just as proprietary as Apple is… with a smaller marketshare to boot…. If you don’t think so, then you need to chiggity check yourself before you wriggity wreck yourself.
yes investors are interested in PROFIT.. not these piddly we’re gonna make a million dollars more because of the exchange rate, crap…
it’s not about that.. but it may as well be.. revenue is boring.. anyone investing in the napster venture better have a quick trigger finger…(eh, that was supposed to be a metaphor.. but if you work for napster and feel the urge to blow your head off, go right ahead)
think about it, Apple is still missing some stores (Aussie & Japan), that is @ least another 600,000 songs a day if those 2 countries are added and done RIGHT! which will give apple about( since the last estimate i heard was about 1.4 million-I don’t even know whether that is worldwide) 2 million downloads a day. Not bad i say, not bad
magic word each —-As in to each his own, let Napster do it’s own numbers even though I like the sound of Apple’s numbers much better! lol
simple1: absolutely correct, the last interim has iTMS selling at a rate of 1.35 million tracks/day, and that rate may well have increased to around 1.5 million tracks/day by the start of May.
In any case, Apple is on course to declare 350 million downloads within the next 48-72 hours which means that iTMS has shipped over 125 million tracks this year with over $120 million in sales – nearly [B]EIGHT[/B] times the projected fourth quarter figures for Napster. This means that – subscription model or no – iTMS probably still accounts for around 80% of the global legal download market by value which – given the marginal profitability of the marketplace – doesn’t really create a viable future even if you’re the “strong” Number 2 in the market like Napster.
What this doesn’t take into account is the viability of the Janus-capable player market: how long will Creative, iRiver et al live with the kind of discounting that is necessary to overcome the iPod’s mindshare or brand equity at the point of sale.
If it turns out that these manufacturers can only make 12.5% gross profit and 5% nett (after marketing, distribution and overheads), how many manufacturers will simply pull their Janus products from the marketplace or go out of business altogether.
And without Janus players, Napster-To-Go is, to paraphrase one Paul Thurrott, a dog that just won’t hunt. And without Napster as a poster boy, what price Microsoft’s WMA strategy.
I’m no business expert but… revenue is total income right? Profit is what’s left after expenses so…
$16,000,000 / 400,000 = $40 a month per subscriber?
Nobody’s paying that much, I believe it’s around $15 a month so wouldn’t that be more like
400,000 * $15 = $6,000,000 ?
Are they expecting each user on average to purchase 25 songs to keep in addition to their subscription or are they making this money in other ways? $10,000,000 short even if it costs them $0 to run their business? Could somebody explain where I messed up here?
Don, there are 3 months in a quarter, so it’s about 400k times $15 times 3 which is roughly $18 million. Of course, some are students who get a cutrate deal.
Remember the first month is FREE.