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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 @ 10:54am

    Re: Re: The Economist, 6 July 2006

    There is a lot more that goes into the cost of running iTMS (or any business division for that matter) than what they pay for a product and what they sell it for.

    Consideration has to be given to all operating costs and overhead involved, employees (fully burdened), cost and upkeep of iTMS, marketing and advertising etc. If iTMS is not paying for itself and turning a profit through the sale of music then it is being subsidized by another division within Apple (in this case the iPod) and is therefore a loss leader.

    Now, I have no idea if iTMS is a loss leader or not, I can only go by what I hear. I have never looked at Apples financial reports. But there is simply more to calling something a loss leader, or not calling it a loss leader than "how much do they pay for materials and how much to they sell the product for.

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