Napster’s 2Q highlights: Revenues are up 24% y/y, to $31.6 million, and the company has stopped burning cash. The lowlights: It’s no longer burning money because it’s retreating from its core business: Selling all-you-can-eat music subscriptions. A year ago the company spent $8.5 million on sales and marketing, and this quarter that number had shrunk to $5 million.
The results: six months ago the subscription music service had 830,000 subs, three months ago it had 770,000, and now it has 750,000. The company says that last drop was expected, because kids stop using the service during the summer. But it’s not as if those numbers will swell this fall: NAPS projects only a 4% revenue increase for next quarter.
So instead of talking up its core subscription business, Napster is now pinning its hopes on the mobile industry. Music on your mobile phone may one day be a real business, but hard to see why Napster is going to be the company that will capitalise on it. In the meantime, Napster has concluded that PC-based music subscriptions aren’t a growth business — the same conclusion that Yahoo! Music, RealNetworks and MTV have already come to.
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