Friday, February 09, 2007

Napster announces upturn from "complete basket case" to "basket case"

The increasingly bemusing Napster has posted what it seems to think is good news: Napster has managed to only lose about ten million dollars in the last quarter.

At this rate, they might be within striking distance of seeing the corner they need to turn sometime around the Christmas after next.

Napster are currently claiming a subscriber base of 566,000. We've done the maths, and that means each subscriber equals a loss of USD16.78. Napster would be financially better off if they selected half a million people at random and sent them two free albums on CD.

There's an even more astonishing figure:

Excluding a nonrecurring benefit from prepaid download cards that expired without being redeemed, revenue for the latest quarter was $26 million, the company said.

Let's just not even question what sort of poor company sells gift cards that expire, and look at that figure.

USD26million without the giftcards added in.

With the expired cards not counted, the revenue was USD28.4m.

Which tells us a couple of things - first, Napster is such an unattractive propostion to people, enough people can't even be arsed to use it when someone else is paying for them to add two and a half million dollars to the company's bottom line. If we assume the cards averaged (an unlikely overgenerous) fifty bucks, that's 48,000 people who wouldn't, couldn't or didn't use Napster.

Napster's current opening offer to lure new users is one - yes, one - free mp3.

And if you exclude expired gift cards from the revenue figure, the rise in revenues is just under 6.4 per cent, rather than the 21 per cent headline figure. And - since there is little expense in a card passing its sell-by date - the actual loss figure would be nearer twelve million.

You don't have to be Peter Jones to see a company losing the equivalent of nearly fifty million dollars a year three years into its operation isn't actually a business.

1 comment:

Come on, you know who I am said...

Like a lot of journalists, I was sent a Napster gift card when it launched.

Like a lot of journalists, I use an iPod.

Like a lot of journalists, I only use my Napster card to rack up fair-trade cocaine on my sustainable-forest coffee table.

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