Beleaguered Napster hires UBS to evaluate possible company sale

“Napster Inc., the online-music pioneer that remade itself as a retailer after bankruptcy, said it hired UBS Investment Bank to assist in the possible sale of the company,” Michael White reports for Bloomberg. “UBS was hired to evaluate strategic alternatives including a sale or an alliance after possible suitors expressed interest, Los Angeles-based Napster said today in a statement. No timetable has been set for a decision.”

White reports, “Napster, originally a free file-sharing service, sought bankruptcy protection in 2002 after being sued by record labels. Roxio Inc. purchased Napster that year and used the name to start a paid music-download service. The market is now dominated by Apple Computer Inc.’s iTunes, and Microsoft Corp. this year plans to start a new service for its Zune player. ‘The competitive environment continues to heat up,’ said P.J. McNealy, an analyst with American Technology Research in San Francisco, said in an interview. ‘The days of being a stand alone digital-music service may be numbered.'”

“Napster’s paid subscribers fell 7 percent in the three months ended June 30 to 508,000. The company lost $9.8 million or 23 cents a share in the period. Napster, which in 2004 had an 11 percent share according to NPD data, now comes in at about 4 percent,” White reports.

“Napster had counted Microsoft Corp. as one of its key allies after Microsoft in 2003 highlighted the Napster service on the Windows Media Player. The following year, Microsoft made Napster the marquee partner for a new technology in Windows Media that would let customers get hundreds of thousands of songs on portable devices for a monthly subscription fee,” White reports. “Earlier this year, Microsoft shifted its focus to a music- service partnership with Viacom Inc.’s MTV cable-television music channel. Then, in July, the software maker said it will compete with Napster directly, selling its own music service for a device called Zune that will take on Apple’s iPod this Christmas.”

Full article here.
It looks like Napster finally did the math.

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26 Comments

  1. “Napster” once stood for free media. With all these TV and music distributors wanting Ad supported content given away, it is a much better Karma match for Napster to be sold to YouTube or something and once again reclaim its roots.

    I, along with many people, loved Napster back in the day. I don’t intend to ever go back to it, but it would be nice to see it reclaim it’s history and live on in that niche space.

    One thing is for certain, it will NOT live on in its current space for much longer.

  2. Renting music online doesn’t work and Napster has proven it by its failed attempt. Real, Rhapsody will follow this ill fated path. Renting music is inconvenient, more expensive, and a big hassle to keep up your subscription and if you don’t, you lose it all. Also you can’t burn a CD or move it to your favorite music player like an iPod. So this news is no surprise to me.

  3. this news makes reading an article like the one here all the sweeter… and funnier. seems Chris Gorog would have done better had he kept Roxio… at least he would have had a backup plan.

    was it curiosity that killed the cat? no, it was iPod+iTunes.

  4. So long kittie!

    The only reason I’d see someone buying Napster would be to promote something else via the website. Don’t know what that would be.

    The on-line music segment is now overcrowded. Maybe someone who doesn’t have a music biz like say Netflix could snapt these guys. Assuming that they may want to get into that biz which is a guess on my part.

  5. Thanks for the link — wow, how off was he…? In this interview that was on Sept 01, 2004, he expects Apple’s market share to be less than 10 percent within 24 months…

    Well, it’s Sept 18, 2006, and Apple’s market share has gone UP, depending on what and where you’re measuring from 70% up to 88% (legal downloads in the U.S.)…

    The other side of the coin is, let’s say I have a Napster account for 3 months or so, and Napster goes belly-up… I’ve spent ~$30-$45 and what will I have to show for it…?

    If I wanted unlimited music, that’s what Internet radio is for… If I hear a song I like, I go to P2P and or the iTunes Store… $30/$45 w/ Appe is a much better investment than w/ Napster…

    ds. =)
    Los Angeles, CA

  6. “Ten years from now we are… one of the biggest names in digital music, if not the biggest. We are ubiquitous, and we are cross-platform. We are everywhere you want to listen to music — in your PC, in your living room, in your car.” — Napster CEO Chris Gorog • March 2005

    A little over a year ago that statement came out of Gorog’s face and now he’s looking for a soft place to land.

    And the band played on…

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