February 9, 2006, 12:00 AM

Napster’s Q3 foreign sales more than double as total sales rise 94%

With web sites that serve Canada, the U.K. and Germany, online music retailer Napster Inc.’s third-quarter foreign sales more than doubled year-over-year to $3 million as total sales grew 94% to $23.5 million, it said today.

With web sites that serve Canada, the U.K. and Germany, online music retailer Napster Inc.’s foreign sales more than doubled year-over-year to $3 million for the third quarter ended Dec. 31, as total sales grew 94% to $23.5 million from $12.1 million, it said today.

Most of the foreign sales were in Canada and the U.K., since the German site didn’t launch until mid-December. Napster also plans to launch a site for the Japanese market later this year.

Total revenue was virtually unchanged from Q2’s $23.4 million. The company suffered a net loss before taxes of $16.7 million in Q3, up from $13.3 million a year earlier. After-tax net loss amounted to $17 million. Napster is No. 269 in the Internet Retailer Top 400 Guide to Retail Web Sites.

Total Q3 revenue included $500,000 in hard goods sales of MP3 music players and other devices, down from $2.1 million in the year-ago quarter. Napster sells hard goods through the Shop Napster or “Napster Gear” sections of its U.S., Canadian and U.K. web sites through an e-commerce and fulfillment arrangement with Vcommerce Corp. Vcommerce hosts the hard goods sites at a server farm in the U.S., maintains a common electronic product catalog, and arranges for drop-shipping from suppliers, Vcommerce says. Napster merchandise managers pull product images and data from the Vcommerce catalog to create page displays.

Napster’s subscriber base grew 110% year-over-year in Q3. It now numbers more than 500,000, the company says.

The company expects Q4 revenue of $25 million. It says it expects expenses to decrease, but did not provide details. Napster reports that it believes it has enough cash, cash equivalents and short term investments to fund the business through at least the end of this year.

"Napster had a strong third quarter, adding substantially to our premium subscriber base which now totals in excess of 500,000," said Chris Gorog, Napster`s Chairman and CEO. "We have grown our premium subscribers 110% year over year confirming strong demand for Napster`s subscription product. Subscriber revenues now represent approximately 86% of music revenue.

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