“Although it is losing money, Napster maintains a debt-free balance sheet with $132 million in cash, or about $3 per share, so the downside risk is limited. Bulls say Napster is an attractive takeover target for a search or portal company looking to get into the music business, or a device manufacturer looking to leverage Napster’s brand. Kit Spring, an analyst with Stifel, Nicolaus & Co., writes that if Napster experiences pricing pressure, ‘we believe it could decide to sell the company — and we believe there are several interested parties.’ Last year, Yahoo bought MusicMatch, another online music service, for $160 million — an estimated four times revenue. ‘We think Napster is worth more, given its stronger brand name and higher subscriber count,’ adds Mr. Spring, who estimates the company has a takeover value of $7 to $8,” Laurie Kawakami writes for The Wall Street Journal.
“Napster’s service is Windows-based and not compatible with Apple’s iPod player or the iTunes music store. ‘Until a device manufacturer breaks the iPod stranglehold on the market, Napster and other players on the Windows side of the market are chasing a niche opportunity,’ writes Steven Frankel, an analyst with Adams Harkness, who has a ‘reduce’ rating on Napster. He expects the iPod and iTunes combo to remain leaders in their respective categories in 2005, limiting the appeal of Napster’s service. He also notes that Apple could unveil a subscription service tied to its iPod player, further threatening Napster’s business,” Kawakami writes.
Full article here.
Related MacDailyNews articles:
Ericsson + Napster; Ericsson CEO ‘We gain access to strongest digital music brand in world’ – June 15, 2005
Report: Apple iTunes Music Store more popular than most peer-to-peer file sharing services – June 07, 2005
Apple’s iTunes Music Store passes 430 million downloads, market share increases to 82-percent in May – June 07, 2005
Motorola CEO: Apple iTunes mobile phone on track for July debut, carriers not balking – May 18, 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
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
search or portal company looking to get into the music business, or a device manufacturer looking to leverage Napster’s brand
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how many times do we have to be told that we recognize the Napster brand, before we believe it. Why not tell us another 400 times, guys.. over here iTunes is the biggest name in digital music, and Napster is 2000 Internet folklore… oh you didn’t know that? Ask Metallica..
Boo Hoo for Napster. Cry me a freakin’ river.
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MW: ‘play’…as in Napster and the others can’t play with the big boy (yes it’s singular).
napster is a suck-ster
first post maybe??
maybe not
Don’t want no stinkin subscription. Why should I pay over and over again for something I can pay for once and own it for the rest of my life. Play it anytime I want to when ever I want to. Not have to check in with some company to see if I can or can’t play a song because I did or did not pay my monthly subscription fee. I see no benefit what so ever in using that model. I can get all the free streaming I want elsewhere without having to pay and that even includes iTunes as well.
Steve Jobs said the subscription model was a bad idea and I still agree with him 100%.
The “game” has been over now for about a year and Apple has won. All of the rest are doing nothing more but fighting over the scraps that remain, that’s all. The war is all over but the shouting. And the sooner more in the media realize this, the better.
honestly, that’s what these analysts did. basically these guys are saying that they see a possible buy out or acquisition of napster, and for their investors, a long term stretegy for investment. buy napster stock hold it until the buyout, price goes up, sell. who cares if they survive, everyone knows that itunes/ipod is king. the whole point is they see napster being flipped and someone making some cash, hense the musicmatch reference. they also do a good job setting up two possible scenarios let’s call them: creative napster merger or the google acquisition. creative is in a world of hurt, but if they merge with napster they’ll create a hardware software symbiosis similar to itunes + ipod. if this happends you begin to see buy a creative whatever get month of napster unlimited downloads (subscription) free (credit card required) napster could then place creative as the prefered hardware via drm locking other devices out. we’ll call this the apple model. with creatives recent economic wows, i see it more like napster buying a chunk of creative. the google acquisition, no direct hit on apple here. the bull’s eye this aims at is yahoo. at $300 a share google could buy napster and give the music away. let’s hope this actually doesn’t happen, the whole give the music away part, that would effectively kill itunes music store, and all windows media based services. let’s face it free versus 99 cents, and lets say mac compatibility for say 3 months would put a nasty dent in apples dominance. honestly at $300 a share google could buy napster and creative. now, wouldn’t that be interesting? of course all of this is speculation, so don’t hate. a creative napster merger would still be a niche player ipod dominance in the windows world is just too great. a google involvement would blow the door wide open, forget about the whole give away music fantasy, google is so huge it’s a freaking verb (i.e i googled it, or just google it).
if Microsoft can loose the operating software war, than Apple can loose the MP3 war.
Perhaps neither are possible.
http://vadermcgavin.ytmnd.com/
that’s all.
‘chasing a niche opportunity’
LMAO LOL ROFL!!!
Yes the people who are hard of hearing & almost blind to believe anything Windows Media is better than MP3, AAC, MPG, etc etc…
or Microsoft branded.
The only way that a subscription model will work for me is if it’s far cheaper, maybe £5 a month – in conjunction with regular purchases.
There is a large volume of music I would like to try (more than 30 second clips) but am not willing to pay for right off – I buy too much as it is.
I wouldn’t mind paying a small amount to be able to try a volume of stuff before I commit to a purchase. Subscription only is just downright flawed.
Now is the time for Apple to go for the kill. The Podcasting feature was a nice step, but we need another. Find the compelling feature that locks people in and do it.
“Napster’s service is Windows-based and not compatible with Apple’s iPod player or the iTunes music store. ‘Until a device manufacturer breaks the iPod stranglehold on the market…”
I find the use of the term “stranglehold” in reference to the iPod and iTunes to be absurd. The iPod and iTunes are simply a good product and service offering to the community, which bought it up voluntarily. Apple has always been the underdog and has been in no position to browbeat people into using their products.
As long as Apple continues to offer the best, people should naturally choose to use it. If Apple becomes complacent and lazy in this area, someone else will find something better to offer and will take over the business – it’s that simple. The only “lock-in” that Apple needs is to continue offering the best.
In contrast to the Microsoft business model, the difference is like night and day.
The only people who like the subscription model are analyst and ceo’s of companies. The public doesn’t want it. As long as these guys have an invested interest in this, they are going to keep hyping Rio, Napster, yahoo, whatever.
In response to M.X.N.T.4.1,
Napster does allow you to purchase music, but the price is 99c per song in addition to the monthly fee. iTunes is still the best.