Napster’s revenue grows 34% year over year to record $28 million

Revenue at digital music download retailer Napster Inc. grew 34% in the first quarter of its 2007 fiscal year, reaching a record $28.1 million from $20.9 million a year earlier, the company reports. Sales were up 5% from the preceding quarter.

Net revenue for the first quarter of 2007 includes $1.9 million of one-time revenue from prepaid card breakage.

Net loss was $9.6 million for the first quarter, compared to a net loss of $19.7 million in the first quarter of fiscal 2006.

"Our first quarter was highlighted by record revenue and the launch of our new Napster.com advertising-supported free music service, which is off to an encouraging start as we saw an over 50% increase in monthly unique visitors and ended the quarter with a run rate of 60 million page views per month," said Chris Gorog, Napster`s chairman and CEO. "Our new free service should lead to lower subscriber acquisition costs and improved subscriber retention while building advertising revenue."

Napster also reported that its subscriber base declined 7% from the previous quarter, attributable to its shift to advertising-supported free music. As of June 30, Napster`s total paid subscriber base was 512,000, including 4,000 university subscribers—most Napster university subscribers roll off during the summer, the company says. Excluding university, the number of paid subscribers grew 26% year-over-year.

Napster is No. 100 in the Internet Retailer Top 500 Guide to Retail Web Sites.