“Poor Chris Gorog… [Back in 2002,] he’d just struck a deal to acquire the insolvent Napster’s assets – including its name and iconic kitty logo – for $5 million. Gorog renamed his company Napster and launched a paid music subscription service, insisting the brand alone would draw millions of customers,” Devin Leonard reports for Fortune.
“Well, that didn’t happen. Today, Napster, headquartered in Los Angeles, has only 760,000 subscribers who pay about $13 a month to listen to its library of 6 million songs,” Leonard reports. “Napster continues to face tough competition from RealNetwork’s Rhapsody. Today, Rhapsody boasts 1.9 million subscribers, including users of its steaming radio service.”
MacDailyNews Take: Really, it’s quite amazing, and a testament to the medical profession, that so many victims of brain damage are out there, not to mention functional enough to blow $13 per month on those messes. The same poor bastiges also lined up to buy Oldsmobile Aleros on April 29, 2004, no doubt.
Leonard continues, “The company has never been profitable. Napster lost $16 million in its most recent fiscal year ending in March on what it described in a press release as ‘record revenues’ of $127.5 million. Wall Street has pretty much given up. Napster’s stock price has fallen 69% to $1.44 in the 3 1/2 years since its re-launch.”
“Now the situation is about to get more absurd. The 55-year-old Gorog, who declined comment, is trying to fend off a proxy campaign bankrolled by Kavan Singh, a 26-year-old entrepreneur who owns, among other enterprises, a chain of Cold Stone Creamery ice cream stores,” Leonard reports. “Singh and two other disgruntled investors, all enthusiastic Napster subscribers, are vying for board seats at the company’s Sept. 18 annual meeting.”
“Here’s another reason why Napster could be in the news: It has a market cap of $67 million. But as of May, Napster had $69.8 million in cash. That’s caused some of the company’s largest shareholders to increase their holdings in hopes the company will be acquired,” Leonard reports. “The most obvious potential buyer is RealNetworks, which declined to comment. But perhaps RealNetwork’s CEO Rob Glaser should wait until Napster’s shares fall a little more. Haven’t we all learned what happens when you invest too much in a famous name?”
MacDailyNews Take: Oooh, Naaapster. Must look like a giant box of Krispy Kremes to Rob right about now.
Me, Gorog. Me sell whole mess to Big Robby. Me buy boat, take some time off.
If Real waits for the stock price to decline, the cash will probably decline further as well…
Huh? What’s the Oldsmobile Alero connection? I just looked it up, and I see those cars quite often. There doesn’t seem to be anything special about the car… <confused>
Re: Alero – they stopped making it on Apr 28, 2004.
Re: Napster. Subscriptions are not my thing, though I do know people that do enjoy them. Obviously, Napster and Rhapsody are not doing well with it, so it doesn’t seem to be drawing in people (though you can buy individual tracks from each, correct?).
I think that the problem is that subscriptions, in theory, appeal to people that like a lot of different kinds of music. However, none of the services offer a wide enough breadth of music to satisfy that demographic. So they are left with people that basically are willing to pay for what amounts to commercial free radio.
“Me Gorog…”
Funniest MDN take ever.
“Today, Rhapsody boasts 1.9 million subscribers, including users of its steaming radio service.”
Steaming, eh? Freudian slip if I’ve ever seen one.
Re:Re:Alero-They stopped being “they” on that date, meaning Oldsmobile became a piece of history themselves, as Napter is about to.
Funny you mention Krispy Kreme since only a month ago, some 21-yr old shyster from Charlotte, NC offered to buy it by faxing over an offer of $500M, even though he’s being sued for previous attempts at sham companies.
Check out this guy’s joke of a “private equity” website:
http://mglasset.com/
“and a testament to the medical profession”
Just doing my job, MDN! Keeping the idiots alive long enough to breed (see Idiocracy) and buy Micro$ucks products.
Me Gorog, me about to be bankrupt, me about to die.
Hey, Real, eat napster and die!
Oh, and I love the derogatory putdown comments by MDN (yes, no sarcasm here).
“Me, Gorog.”
Classic!
And if readers of MDN don’t like their comments, go sing Kumbayah somewhere.
Great headline.
He’s taking time off to spend more time with his family.
Give it a week or two and when the market cap is less then the companies cash on hand just buy back all the stock and close up shop.
Then Chris can sell off the name and infrastructure to pay-off the final bills and with what’s left over he can pay himself a severance of walking around money.
Unlike these online messes, my Alero runs just fine. I got a $2k factory rebate (unheard of at the time), and got a nicely equipped V6 that would have cost another $7k more for a like Accord.
Plus, the Alero didn’t look like a Neck-Car Pontiac Grand AM either…
It’s got ‘lectro-lights!
waiting for the dirt Napster…
Why would Real buy Napster? Sure, it has cash, but Real would only gain 760,000 subscribers and would have to integrate Napster’s networks into Real’s networks and services. And how much of that $69 mil goes to creditors, eh?
I think Michael Dell was right, only he was really talking about Napster: Shut it down and give the money to the shareholders.
He has a part time job driving prehistoric race cars to keep up with living expenses.
WSJ: Hey Napster Investors there may be a buyer to bump your stock price!
Napster Investor: Sweet, who’s the buyer? Is it Microsoft? RealNetworks? RIAA?
WSJ: It’s Cold Stone Creamery.
Napster Investor: What?
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WSJ: Well, not really Cold Stone Creamery. Just a franchise owner who subscribes to Napster. He hopes if he buys your company his music won’t go the way of MSN and Yahoo.
6,000,000 songs divided by 760,000 subscribers equals 7.9 songs per subscriber.
Isn’t that about the average number of songs per iPod owner?
But seriously, what do you want to bet that 90% of the tunes listened to are the latest Pop 40 dreck, and that a million or more have never been downloaded at all, or a=t least only a few times? (The famous long tail effect)
“And if readers of MDN don’t like their comments, go sing Kumbayah somewhere.”
So George Carlin isnt dead – ! Yeah! He’s postin’ here on MDN!
“Poor Chris Gorog… [Back in 2002,] he’d just struck a deal to acquire the insolvent Napster’s assets – including its name and iconic kitty logo – for $5 million. Gorog renamed his company Napster and launched a paid music subscription service, insisting the brand alone would draw millions of customers,” Devin Leonard reports for Fortune.
Don’t forget that before renaming the company Napster, Gorog sold Roxio’s profitable consumer software business like CD/DVD authoring/burning apps for $80 million to fund a money losing venture. What a great business plan.
It’s such a shame. If Napster had been DRM-Free from the beginning they would have crushed iTunes. But they weren’t, so they didn’t. Now it seems Apples only competition is Amazon at .000005% market share.
I’m floored they even have $69 million in the bank.
Seems like with that kind of cash they should be able to set up a nice website, get DRM-free tracks from the major labels and actually make a little money from all the Apple-haters out there. Create an App for iPhone that identifies songs (like Shazaam) and points you to the DRM-free versions on Napster.
They could set up a store-front for indie bands, garage bands and people using Garage Band. They could do a CD-Baby knock off. They could offer CD mastering and packaging services for rocknroll wannbes. They could offer internet radio service for aspiring artists.
There’s all kinds of things that $69 million could let you do that wouldn’t even come close to competing with Apple or would ride Apple’s coattails. Create an app
That’s my “theory.”
“Today, Rhapsody boasts 1.9 million subscribers, including users of its steaming radio service.”
Its “steaming” radio service?
Methinks this is a Freudian slip…