November 6, 2007, 12:00 AM

Napster cuts its loss in the second quarter

Online music subscription service Napster Inc. posted higher revenue and a lower loss in the second quarter of fiscal 2008. For the quarter Napster’s net loss dropped by 43.3% while revenue increased by 23.9%.

Don Davis

Editor in Chief

Online music subscription service Napster Inc. posted higher revenue and a lower loss in the second quarter. Napster, No. 108 in the Internet Retailer Top 500 Guide, also reported a slight drop in the number of paid subscribers.

In Q2 of the 2008 fiscal year, Napster posted a net loss of $5.1 million on revenue of $31.6 million compared with a net loss of $9 million on sales of $25.5 million in the prior year. For the quarter Napster’s net loss dropped by 43.3% while revenue increased by 23.9%.

The number of paid subscribers dropped by 2.6% to 750,000 as of Sept. 30 from 770,000 in June. "Napster substantially narrowed our net loss year-over-year," says CEO Chris Gorog, Napster`s chairman and chief executive officer. “We remain focused on our strategy of providing our customers with access to unlimited music anywhere, anytime."

In the second quarter Napster launched a new web-based music platform. The platform, Napster 4.0, eliminates the need for subscribers to download software to their personal computer in order to select and play music from the company’s catalog of more than 5 million songs. Instead subscribers can now access and play music from any web-enabled computer.

Napster expects to post third quarter revenue of about $33 million and to report a profit sometime in the current fiscal year. "We expect to see third quarter revenues grow based on continued uptake of our Napster To Go and mobile-based services,” says chief financial officer Nand Gangwani. “We are also reaffirming our previous guidance that Napster will be cash flow positive for the fiscal year, a first for our company.”

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