Napster, still doggedly referring to itself as “the biggest brand in digital music” in their press releases, today reported financial results for its fiscal second quarter ended September 30, 2005.
“Napster posted a net loss of US$13.6 million, or 32 US cents a share, compared with a net loss of US$15.3 million, or 44 US cents per share in the year-ago quarter. Revenues of US$23.4 million compared with US$9.3 million. Analysts’ consensus had forecast Napster to post a second quarter loss of 47 US cents and revenues of US$21.7 million,” Reuters reports.
“For the second quarter ended 30 September, the total number of Napster paid subscribers grew to 448,000. For the quarter ended 30 June, paid subscribers, excluding university subscribers, totaled 402,000. It was unclear if the latest second quarter subscriber figure included university subscribers,” Reuters reports.
Full article here.
Napster ended the second quarter with a total of $127.3 million of cash, cash equivalents, and short term investments, including $13.8 million in net value of shares of Sonic Solutions stock.
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Revenues of $23.4 million for the quarter with a net loss of $13.6 million. For the purpose of comparison, on October 11th, Apple announced their earnings results for the quarter ended September 24, 2005. Apple reported revenue of $3.68 billion and net income of $430 million. Apple’s music revenue totaled $1.477 billion for the quarter. In the last quarter, Apple matched Napster’s total quarterly music revenue of $23.4 million sometime during the 34th hour of their quarter. Now, about that “the biggest brand in digital music” stuff? Do the math.
Related articles:
Apple passes 600 million iTunes Music Store songs sold milestone – October 25, 2005
Apple Q4 05 earnings report: best quarter & best year in company history – October 11, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Napster’s dirty little secret: changing subscription services into downloads is easy – February 18, 2005
Cornell University’s Mac users ‘uniformly unhappy’ with Napster – January 19, 2005
College students refuse to buy a single song from Napster – July 10, 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
Napster: the only thing missing is the sock puppet – August 04, 2005
SmartMoney: Napster is a snooze, gushing money and renting music is un-American anyway – 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
Napster users admit sharing passwords to save on subscription costs – April 08, 2005
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
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
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
Way to go Napster! Not enough colleges signing up, eh?
MW: standard. Napster hopes to become the new standard in failing miserably.
Anyone seen the new Napster commercials? They try to put a positive spin on the subscription by just coming right out and saying “Own nothing, have everything”.
Own nothing. That says it all.
got to love all the apples!!!
What was apple’s PROFIT for MUSIC last quarter?
subcription model’s already fallen. after all, you own nothing. human being has basic instinct to own something so that they have feeling that this is mine.
So, they have $127.3 million in the bank and have been losing around 14 million per quarter. That makes me think that they are only going to be around for about 9 quarters. I don’t think we’ll be hearing about Napster after 2007 ends….
off topic of course…..so the other day my wife and i were sitting in bed next to our imac G5 and we wanted to watch a movie. We put in ” What’s the worse that could happen”‘ with Danny Divito and Martin Lawrance. The drive read the disc….the spit it out on the floor. I actually love when this happens…..I wonder if this is the ” once a user finds something they didn’t even know they wanted, then realized that Apple thought of that while creating it” features Steve talks about. Before you all flame me, I am a long time Mac user……and even Apple II and commodore 64 user to…..or for those real old timers…the vic 32, so don’t go assuming me to be an Apple basher. Now, are there any firm ware updates that I have missed that correct this….not that I want it. Whenever my wife burns cd’s or dvd’s she knows our imac is done because he discs rolls out on the floor. This I believe is the 2nd rev we bought it in Febuary 05, already replaced the power supply.
thanks, jarrett
space, as in i need to create a clear, safe spot for our media to land.
Apple earned $265 million last quarter on iTunes Music Store sales and iPod related services and accessories. They don’t break those numbers out individually or report the profit numbers on just on iTMS sales.
The other $1.212 billion of the $1.477 billion in music revenue quoted by MDN above were from iPod sales, of course.
Figures from Apple’s October 11, 2005 8-K filing which can be found via: http://www.apple.com/investor/
Jarett, it would be neater if your name was jared, like the subway dude. Anyway, i bet you could put some kind of cloth with a slit in it over the cd drive (on top of the cloths that the imacs already have), that would keep the disk from going all of the way onto the floor. My imac(also february 05) never spits the disks all the way out of the drive, just half way. I am guessing that your problem is just that the cover on the drive is not stiff enough.
I’M THE REAL NAPSTER!
to Jarrett:
No, I have not heard of this problem. We have a G5 iMac at work, and the CDs eject ok, however, the person that uses it says that every now and again the CD does launch fully out of the side loader and lands on his desk – but not too often. However, if you have a DVD in there, it should read it and not eject it. I would try checking out the forums at the apple support site to see if there is any information there.
My iMac also have this “spit-it-out”syndrome. Not all the time, but with certain CDs and DVDs. Could it be that some CD/DVDs are teeny weeny thinner ? Anyway, on-topic : Napster suck for me as a Mac-user…we all know why.
How about some real ‘numbers’ MDN?
Compare Apple’s ‘iTunes Music Store’ numbers with Napster’s numbers. That’s true Apple’s to apples.
MDN says Apple hit 500-million songs on July 17, 2005, then hit 600-million songs about October 25, 2005. That’s about 100-million songs in 100 days, or 1-million songs a day, or $1-million a day (give or take).
In a 90 day quarter, iTunes Music Store is doing about $90-million in music sales. What’s Naptster in the same period? $23-million and over double the revenue from a year ago. Not bad growth, except for the losses, and that gap is closing. Finally, some competition?
Looks like Apple’s iTunes Music Store has actually dropped to about 1-million songs a day, doesn’t it? That’s about $1-million a day revenue from 21 countries. That’s also slower sales than from mid May 2005 to mid July 2005 when Apple’s iTunes Music Store sold 100-million songs.
iPod sales continue to grow but iTunes Music Store’s daily sales rate is at a plateau.
Uh oh. Not good news, folks.
Bambi Hambi
Mac360
MDN magic word ‘thinking’.
The ironic thing is that, while I want to own my music, I have no interest whatsoever in owning movies. I want a film subscription. I can’t explain that really, except that, as Steve Jobs says, you watch a movie maybe once, maybe twice (maybe ten times if you’re a total geek and it’s 1980 and it’s Star Wars), but you can listen to your music dozens of times and it just gets better every time.
I’ve listened to some Art Tatum and Oscar Peterson recordings maybe a hundred times and I still get all slack-jawed. But if I had to watch Sleepless in Seattle twice I would shove a hand grenade up my nose.
Sum Jung Gai (nice name by the way
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I was thinking the very same thing and wholeheartedly agree, although I have nearly 500 DVDs in my collection. I do not have cable premium channels and do not watch television (too busy most of the time), but I’d drop $9.95-$14.95 a month to DL any number of time-limited or low quality movies I could watch on a subscription basis and not feel like I was being cheated, as I wasn’t expecting to “own” the movies anyway. I guess this is due to the ubiquitous television model where I just watch whatever is on at the time. I could record televison shows to VHS, but I would not expect it to be good quality or last long. This is why I love DVD and when I buy one I expect it to be archival quality.
SirROM
MW: friends, as in one of the DVD series I don’t have, but would watch if I had a movie subscription service through iTunes so I didn’t have sink a fortune into all 10-11 seasons….
Hey B Hambi,
If I were to give you a million dollars to make one trade: Short Napster stock, or go long on Napter stock, which would you do?
iPod and iTMS users are now finding a ton of content to further lock them in and promote the platform through Podcasts, which are not reflected in any sales yet bode well for the future of the platform.
Napster is firing up the national ad campaign again, but may be only burning up cash over the long run.
I would guess that Apple hit the 600M mark close to Sept 7th … in SJ’s announcement … he mentioned 10 million accounts with an average of 60 songs purchased … do the math.
SJ also mentioned in his announcement on Sept 7th that the rate was 1.8 million songs sold per day.
OMG, their website sucks; it is sooo static. If I’m a hip-happening college student, I want to see some motion, some action at the site. Maybe a little Flash w/ Gwen Stefani telling me how great Napster is and I should try it. Right, like Gwen would ever do that. <hehehe>
Anyone know if Napster works in Virtual PC?
MDN Magic Word = “given,” as in “It’s a given that Napster will fail.”
Bambi, that date for 600M was the Aussie iTMS opening date, when they held a press conference in Aus. They didn’t say exactly when they passed the 600M mark, just that it had been passed.
As for Napster, their ads are really odd. Hypnotic, as if they’re trying to hypnotize you into joining their little cult. A little weird marketing. I’m not sure it really plays too well, as the message seems to defeat its purpose.
The numbers are interesting. It seems like they’re losing money while generating sales of about $15 a subscriber a month. Conversely, Real, which is making money on music is only generating about $4 a subscriber a month. Counterintuitive, if you ask me.
To all the nit-pickers:
Napster’s “biggest brand in digital music” claim doesn’t require an “Apple-to-Apples” rebuttal. MDN’s point is that Napster is one of the smallest brands in digital music.
Because Napster is primarily a subscription service, there is no realistic way to compare iTunes’ and Napster’s revenue numbers.
For all we know, Napster’s subscription revenue may have already hit a plateau. The company may already have as many dimwit renters as they’re ever likely to get. Even if Napster manages to hook a few more, the fact that subscribers won’t lose anything by leaving (since they don’t own anything, anyway) means Napster will have to fight to keep and hold subscribers past any initial commitments.
How many people do you know who’ve expressed interest in a Napster gift card? How many have times has someone bragged up their music rental service to you? Napster isn’t gaining mindshare, and their subscription model isn’t going to save the music industry.
So even though I’ve never purchased a single song from the iTunes Music Store, I am continually insulted by Napster’s advertising and bewildered by the whole music rental concept. Therefore, I have no problem with Napster-bashing for sport.
so it swallows, and then it spits? i guess thats ok as long as it swallows in the first place.
Never mind the songs sold..remember Jobs said they have (more than?) 10 million live user accounts on iTunes.
Total number of subscribers is up (46,000?).
Revenue is up and beat analysts consensus.
The company still has money to burn (in cash & equiv).
That’s all the good news. Now for the bad:
Advertising is damned expensive and will burn cash fast (better not do much of that).
If the company goes down everyone who rented music loses their legal rights to their tunes.
I wonder how the “greedy record companies” feel about selling music through subscriptions…. better start raising the price to subscribers if “new cuts” are played by users.
I know two Napster users. They both use “sideways” software to make illegal dubs of their rented music…. Hmmmm, perhaps this is where the swap sites are getting the latest material. Nice! Good going Nappy.
If growth of their subscription base continues at their currrent rate of increase the rotton music stealing brand, Napster, will be history in 13-19 months.
MW: beleagured
R.I.P NAPSTER.
Your song is over.