Napster, Still Struggling, Puts Itself Up For Sale

from the shocking dept

Napster's never been able to regain its cachet in the music-download business after going legit, despite a few different owners, so it's hardly surprising to see the company essentially put itself up for sale. While the company's CEO says there's been a lot of interest in partnerships or joint ventures, Napster's struggles illustrate the reality of the music download business as one where it's awfully hard to make money. While Apple's sold over a billion songs through the market-leading iTunes Music Store, those songs were loss leaders, intended to drive iPod sales and to lock users in to the device. The CEO also says that its new products are getting "traction" -- but they don't look to be helping the company turn a profit, and it said it's losing paying subscribers as it promotes its free service. There's nothing here, and nothing in the company's history, to suggest it can be successful. Perhaps the best thing for the company and its shareholders is to grab whatever cash it can in a buyout, playing off the growing interest in mobile music download services by selling out to a company in the mobile space that can ditch the current Napster offerings and salvage its backend into something useful -- with Ericsson, a company already partnered with Napster for mobile music, a prime candidate.

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  1. identicon
    just ®idiculous, 19 Sep 2006 @ 9:37am

    Re: those songs were loss leaders

    All the chatter posted by Techdirt contributors notwithstanding, Apple is not losing money on a $0.99 song, therefore it's not a loss leader. The original source merely quotyed Jobs as saying "most" of the iTMS revenue goes to the music companies. You can call that aggressive pricing, thin margin, or brilliant. But in any event, Steve Jobs is shrewd and while he might have given concessions on the front end to music companies to bring them into the fold, you're going to have to find data more recent than November 2003, if you want to continue top insist that iTMS is a loss leader. Don't be disingenuous.

    The obvious fact is that most consumers will purchase one iPod every few years, but can purchase many songs every month. The iTMS is much more akin to a subscription service than a loss leader.

    Back on topic, Napster never had any customers, it had a many users. Suggestion to Napster: if you can figure out how to turn your many users of your free service into many paying customers, you should patent that.

    Frist pots!

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