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
    AMP, 19 Sep 2006 @ 12:46pm

    Re: white flag

    "While I do not agree that a low margin is equal to a loss" I agree, these are similar pricing strategies, however they do differ in that a low margin product is squeezing some profit out of the product. Again, I have no idea if iTMS is a loss leader or a low margin product. I think the posts have gotten caught up in semantics here. The term loss leader is only as black and white as is the companies book keeping practices. The bottom line is; loss leader or low margin product, iTMS is not making a lot of profit (high revenue probably, high profit probably not) and is used to bolster sales of the higher margin iPod. This seems to have worked well for Apple. Problem is, most music download sites don't have their own MP3 player to sell, at least as far as I know (does Napster have a product line of it's own? This is where partnering with a company like Ericsson would help, should they decide to follow the same business model. Now all they have to do is market the product/service as well as Apple has.

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