Napster subscribers decline; Company considers sale

Napster said yeterday that it wouldn’t rule out a sale of the company after reporting that the subscriber base for its online music service had fallen 7 percent. “We do not have our heads in the sand regarding an M&A (merger and acquisition) transaction. We continue to receive a lot of interest in the company. We will always carefully weigh any valuation alternative against the opportunity and risk associated with continuing as a standalone company,” Napster CEO Chris Gorog told analysts on a conference call. Napster reported a net loss of $9.8 million for its first fiscal quarter. The company’s total paid subscriber base as of June 30 was 512,000, including 4,000 university-paid subscriptions.

  1. mstngo.. not true. I love subscription services. I get all my (legal) music from them. Then I use Soundtaxi to remove the DRM, timebomb, and get them iPod-ready.

    The trouble for Napster is, there are better subscription services out there. I’d consider Virgin Digital, Yahoo, and Rhapsody all to be better than Napster.


  2. Josh,

    You seem to be justifying your actions because you’re paying “some” money, but at the end of the day, you’ve still stolen.

  3. He’s stolen nothing. He’s probably violated the terms of his license by removing the DRM, which falls into a gray area legally, but there’s absolutely no theft happening here unless he shares that music with others.

  4. Mstngo, movies are a whole different thing from music. I still have music on my iPod from CDs I bought almost 15 years ago. Owning music makes sense for me and for a lot of people.

    Movies, on the other hand, I tend to watch once or twice when I get them, and then leave them on a shelf. I’ll probably watch it again in 5 years, if ever. I would MUCH rather rent a movie. It would be cheaper for me.

    Now, obviously there are people who are the opposite of me, but I think that there are MORE people who want to own music and MORE people who’d be happy to rent movies rather than own.

    I’m totally in favor of selling movies online to own them, but I think online movie-rentals need to be a part of that too.

    After all, we’ve had Blockbuster video type places for 2 decades now. There were never “music rental” stores before. Napster was trying to create something new and it didn’t work out. Doing movie rentals online would not be new, it would just be taking over from Blockbuster just like Amazon took over business from real-world bookstores.

  5. “He’s stolen nothing. He’s probably violated the terms of his license by removing the DRM …”

    So if I rent a car, but keep it after the contract expires, I haven’t stolen it?

  6. ” “He’s stolen nothing. He’s probably violated the terms of his license by removing the DRM …”

    So if I rent a car, but keep it after the contract expires, I haven’t stolen it? ”

    Damn your Vulcan logic!

  7. This is what they get for that ridiculous “Own NOTHING, Have Everything” commercial branding.

    You don’t want your music catalogue held ransom by subscription. Or of course you can pay extra to burn it on CD.

    One more reason Itunes is untouchable.

  8. You’re assuming he’s keeping the music past the expiration of his subscription. I’m assuming he still has a subscription and is simply changing the digital format of his music so he can listen to it on his iPod or w/e. Neither one of us has any basis for our assumptions. 😛

  9. Either way what he’s doing is wrong. He’s changing, manipulating and stripping property that doesn’t belong to him. With subscription models you own nothing, and I’m pretty sure somewhere in their agreement disclosure it has a statement about altering THEIR files. So call it what you want – it’s still illegal.

  10. Yeah…I don’t ‘raelly’ care. I ‘jsut’ wanted to be the ‘frist’ nudge and ‘mnetion’ the word “yesterday” was spelled wrong.

  11. 3rdEye,

    It’s not illegal. Just because you may or may not violate their TOS does not make it illegal. Napster cannot administer the law, perhaps you are aware of that.

  12. What’s going to be funny is when Napster goes under and all these subscribers are left with absolutely nothing to show.

  13. What’s going to be funny is when Napster goes under and all these subscribers are left with absolutely nothing to show.

    Yeah, then they start paying $10/month for Rhapsody and they can re-download everything.

  14. Hey Josh,

    Care to explain a little bit further how we can get into this free action?

    Does this software work on Mac’s or only PC’s?

    Were can we get the free software?

  15. It’s not free.. but just Google soundtaxi. Nice software. It’s PC only.. but all the subscription services (AFAIK) are PC-only anyway, so it wouldn’t do you much good to have a mac version.

    And yes, I maintain an active subscription.. why wouldn’t I? There is constantly more music coming out that I want to get.. so its constantly in use.

    First off, it’s not actually removing DRM. It’s playing the file, and recording a new copy of it. Which AFAIK is perfectly legal as long as you have the rights to listen the file. I haven’t modified their file it all, it’s still intact, DRM and all. I just have a MP3 recording of it.

    And even if it is against the TOS, and is illegal, it’s absolutely not ‘stealing’. At most it’s copyright infringement. Stealing would be breaking into the record store and snatching a CD. There is a big difference. (In the latter, they’re actually losing physical media and directly losing profit.)

    And yes, the reason I’m doing it is to get them to play on my iPod. Also just because I don’t like DRM. I want to play the files on my iPod, with rockbox, or whatever player I want.

    Galley: Exactly the beauty of it! If an iTunes user’s library crashes, and he had 5,000 songs he had bought he has to buy them all over again and drop a large $5,000. For a subscription user, he just has to download them.. but still pays the same $10 he’d normally pay.


  16. Josh: does the TOS/EULA say anything about you “recording” your subscribed content? THAT would tell you whether you’re in legal doo-doo or not, and whether your subscriber service would consider it stealing, even though you’re maintaining the subscription fee.

    Personally I think you’re stealing. The RIAA is now saavy enough to have covered this in the EULA and TOS. They’re certainly greedy enough, that’s fer sure. And the fact that it’s rented and not purchase content only strengthens any case against your actions. As Zeke said, Fair Use doesn’t apply to rentals…hell, Fair Use (like it once was with vinyl and CDs) doesn’t apply to DRMed anything, other than you can make backup copies or burn a crappy version to CD-R audio.

  17. What gave you the idea that the Fair Use provision applies to rented music? It’s not the same thing at all.

    And it’s not just copyright infringement, it’s also breach of contract. Believe me, I’m no friend of the RIAA … but you wouldn’t have a prayer against one of their members in court.

    I’m just sayin’ … 🙂

  18. Josh,
    I think your logic chip has burnt out. With iTunes you back up your bought music and if your library of 5000 songs crashes you just reimport from your back-up. For a subscription user, you need to spend a crapload of time finding and re-downloading the 5000 tracks and if it’s a different service they might not offer some of the tracks you had. Nice try! 😀

  19. Legal or not, the artists are getting paid as much as they would normally from a subscription serivce, and I’m getting my music at a good price. Plus, I’m not using P2P so there isn’t a very good chance of the RIAA to come knocking on my door. They have no way to track who records their subscription downloads and who doesn’t.

  20. Josh,

    They could always see this, and find out where you live by your IP address which you leave everytime u view the page and leave a comment. lol

  21. 4,000 University Subscriptions? I wonder if that refers just to the numbers of universities subscribing… because i know my large state school pays for all 40,000+ of its students to have a Napster account.
    Owning two macs and an ipod, of course, i’ve never used it.

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