“Napster Chief Executive Chris Gorog trumpeted good news Wednesday afternoon: His company’s quarterly revenue jumped 21% in the last quarter, to $21 million. And, Gorog noted, his digital music company has enjoyed five straight quarters of double-digital revenue growth,” Peter Kafka reports for Forbes.
“But that may not be enough to encourage investors focused on the bottom line–which is a nasty one. Last quarter Napster lost $19.9 million–that is,the company lost nearly a dollar for every dollar it took in. Nor is Napster’s loss an aberration: From April 2003 through the end of March 2005, the company lost $97.8 million selling digital music,” Kafka reports. “When does Gorog see Napster making a buck? He won’t say, only to allow that a big goal for the coming year is to ‘increase our path to profitability.'”
Our Take: “Increase our path to bankruptcy” would have been more like it.
Kafka reports, “If this sounds familiar, it’s with good reason: Napster is in the same position of the big-growth, moneylosing net stocks of the last boom. The question is whether Napster will end up as either the digital music era’s Yahoo! or Pets.com.”
Our Take: Napster: the only thing missing is the sock puppet.
Kafka reports, “There is one major difference between Napster and its competitors, but it likely won’t be a real advantage: Napster is the only ‘pure play’ digital music company…. most of Napster’s other rivals–or potential rivals–are able to eat losses on music offerings in order to sell, say, advertising (Yahoo!) or high-margin electronics (Apple). Napster doesn’t have that luxury. In the end, predicts Stifel, Nicolaus analyst Kit Spring, that handicap will force Napster out of the race. ‘I think Napster can’t surivive on its own,’ he says. ‘It will have to partner with a larger company or more likely just sell.'”
The full article “Napster On The Rocks?” has much more here.
Like we always say, “it’s stupid to buy from Napster.”
Related articles:
SmartMoney: Napster is a snooze, gushing money and renting music is un-American anyway – July 06, 2005
Colleges should not exclude Mac and iPod users with Dell, Napster music hardware, software offering – July 06, 2005
Napster, other Windows Media-based music services ‘chasing a niche opportunity’ – June 29, 2005
Napster To Go Soon? Reports $24.3 million net loss on $17.4 million net revenue – May 12, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Napster users admit sharing passwords to save on subscription costs – April 08, 2005
Napster is a joke – April 05, 2005
Napster raises fourth-quarter revenue forecast from $16.5 to $17.5 million – April 05, 2005
Colleges offering students music services that aren’t cross-platform, don’t work with iPod – March 22, 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 math does not add up – February 28, 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
$10,000 to fill an iPod? Napster’s going to end up with egg on their face – February 04, 2005
Why ‘Napster To Go’ will flop – February 03, 2005
Napster CEO: We’re ‘the biggest brand in digital music, much more exciting than Apple’s iTunes’ – February 03, 2005
Cornell University’s Mac users ‘uniformly unhappy’ with Napster – January 19, 2005
Cornell University wrestles with Napster’s exclusion of Mac and iPod-using students – September 08, 2004
Why are Cornell’s Mac students being forced to pay for useless Napster? – September 07, 2004
Napster schools to Mac-using students: bend over and take it – September 04, 2004
Apple launches ‘iTunes on Campus’ institutional site license program – April 28, 2004
I wonder how much money will be lost when they add Japan to the mix? (If they’re still around by that point.)
I don’t see any value in this company. I can’t possibly understand why people hold on to this stock.
I see in the future, that MS will have to buy Napster to be able to save it. Its hard to say if they will since MS has been doing their own music store as a part of their media player. But it would give them a way to separate the two if they did buy them out, and it would keep the wma going and hope it becomes a standard, even though Apple’s AAC has been winning out so far.
Napster- crapster- whatever.
I still say Apple should allow people to subscribe to 5000 songs per month, for 12$ and then let that 12$ go toward the actual purchase of 12 of those songs by the end of each month.
But I also think ANY kind of sub service Apple puts out who be a killer for those also-rans.
MW million, as in Apple has sold over 500 million songs through iTunes.
When they go under, what happens to the subscription songs?
“the only thing missing is the sock puppet”
Oh, for fukcs sakes, I just wet myself! Nice illustration, too!
More than likely it will just go bankrupt and close. Microsoft isn’t making any money either or doing any better. Renting music is dumb. iTunes is the only pure digital music seller where once you buy a song it is actually yours. And it is the only music seller that actually lets both Windows users and Mac users use there store. All the rest block Mac users. Once Napster goes under all that rented music goes away as there is no one to authorize it to play for another month. Waste of money!
So what happens to those poor souls who’ve been “renting” music but haven’t yet made thier purchases? Will they eventually find themselves without any playable files? I’m not sure I totally understand the workings of Napster’s DRM scheme (and I am really just curious, I guess). If I have “thousands” of rented songs on a Rio, but Napster has folded, will the songs stop playing? Will they go away? Will I get to keep them?
Thank goodness I use an iPod. My music is mine. Yay!
John,
I must have just missed your post as I was posting. I think that answers my question…
GoldFish
In the end MSFT will have to buy Creative, Rio, napster and Rhapsody, then try to form an integrated service/product ala iPod/iTunes to save WMA.
Once the WMA vendors start disappearing, nobody is going to want to buy anything that uses it.
Analyst: Mr. Gorog, are you telling us that you are losing $1 for every song you sell?
Gorog: Yes, but we mak it up on volume!
if your revenue is “x” dollars, and your losses are about “x” dollars, aren’t you really losing “2x” dollars for each dollar you get? if you lost the same amount as you took in you would be a non-profit organization, but it seems like napster is not only losing every dollar in revenue but another dollar on top of it.
also, it is nice that someone named kafka wrote the article. he also has a nice first name too.
MW is schools; maybe some one (me?!) needs to go back to school for arithmetic.
“In the end MSFT will have to buy Creative, Rio, napster and Rhapsody, then try to form an integrated service/product ala iPod/iTunes to save WMA.”
Wouldn’t that look like a monopoly tactic since these devices and services are primarily windows-only? They may not be able to buy them not due to lack of cash but how it would look.
Apple can avoid the monopoly at this point since iPod/iTunes is not tied to the Mac OS.
“if your revenue is “x” dollars, and your losses are about “x” dollars, aren’t you really losing “2x” dollars for each dollar you get?” Good catch, the reporter got it wrong.
Using their numbers from above they had revenue of $21 million and expenses of $40.9million for a loss of $19.9million. For every dollar they took in they spent $1.95.
MW=who, as it WHO would buy their stock?
God, is it possible for you people who write this site to NOT be cocks about any news that isn’t Apple rah-rah cheerleading? You make me sick.
They ought to get into the razor blade or ink cartidge business and make a mint!
COCK-A-doodle-doo!!
Magic word is “hands”, as in Napster loses money hands over fist.
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Contrary to ABQ Peter and iSteve’s confusion, a “loss”, or the amount you lose, is NOT the amount you spend. A loss is the difference between spending and revenue. It is similar to profit, with the word “profit” used if the difference is positive while “loss” if the difference is negative. A business only has a loss if it spends MORE than it brings in, and then only by the amount of the difference. So Napster only lost about the same amount as their revenue, which is bad enough!
Have either of you ever been within 10 miles of a business? Guess not…
Kate
Gregg Thurman is correct….
In the end MSFT will have to buy Creative, Rio, napster and Rhapsody, then try to form an integrated service/product ala iPod/iTunes to save WMA.
Too little; too late.
Once the WMA vendors start disappearing, nobody is going to want to buy anything that uses it.
Think software for the Amiga….
“Have either of you ever been within 10 miles of a business? Guess not…”
-Kate
Well… I guess she really told you guys off! Better watch out ’cause if she really gets ticked she just might rip off one of her pumps and throw it at you!
RE: Kate ‘ripping off one of her pumps and throwing it at you.’
Everyone knows that girls can’t throw anything properly any way so I wouldn’t be too scared.
i don’t know much about businesses i guess, but i do know that if i start with nothing, someone gives me 1 dollar, and i end up owing a dollar i spent 2 dollars somehow. in plain english and plain arithmetic i “lost” 2 dollars. maybe if businesses and wall street don’t look at things this way, then this might explain a lot!! i don’t know any other way to get to -1 from +1 except by subtracting 2. an accountant might say i only “lost” 1 dollar to make me feel better, but deep down inside i KNOW i am out 2 dollars. i think all this talk is why mathematicians think that accountants have a funny way of adding and subtracting!!
Totally sweet! At last: an article about Napster that actually mentions the other WMA services and calls them what they are, “competitors”! No more of this ridiculous fantasy of “Napster vs. iTunes and only iTunes”, as if all the WMA services will only take customers from iTunes and not each other.
jobs warned.. they’re entering money losing businesses..
and they didn’t listen..
ah well..
The only thing wrong with Kafka’s report is that iTMS has been profitable for something like a year. That fact seems to be too big for most analysts to get their minds around.