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
    Devin, 19 Sep 2006 @ 1:48pm

    iTunes might be a loss leader to Apple

    Apple very well might consider iTunes to be a loss leader because Apple has always been incredibly strict one what products it will put to market. Rumor has (from thinksecret.com at some point) it if the profit margin per product isn't 40%.

    Clearly an online music service that deals with the RIAA will never be able to achieve that market share. So Apple may just run iTunes as a 'loss leader' because it doesn't live up to their strictly adhered to profit margins.

    I think this is very likely to be the case. They've went on record and said that iTunes is making them money. They just didn't say how much. I think this pretty clearly explains a lot of Apple's actions.. for example

    1) Why they won't open iTunes to other devices.
    2) That Apple is such a tightly ran company that their loss-leaders even make money.

    They want to make Apple an indispensable company name in media. If their selling of TV Shows and movies takes off (boosts in quality will be required) people will start forgetting that Apple makes computers.


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