February 9, 2006

Silk Purse, Sow’s Ear? [9:20 am]

A sign that subscriptions are still a tough sell? Or that Apple doesn’t want to play? Napster Posts Loss Despite Surge in Sales

Napster Inc., the name that launched the digital music revolution, is burning through cash and struggling to find an audience as a viable subscription service.

The company reported a loss of $17 million for its fiscal third quarter — a smaller deficit than Wall Street had expected. Revenue soared 94% to $23.5 million. A year earlier, the company had a profit of $12.8 million, reflecting earnings from discontinued operations.

[...] Nonetheless, the results underscored Napster’s difficulties in persuading music lovers to stop collecting music one song or CD at a time and to instead pay $14.95 a month for access to more than 1 million tunes.

One big problem: Napster’s service is incompatible with the most popular digital music player on the market, Apple Computer Inc.’s iPod. The portable devices that do work with Napster’s service lack the cachet or simplicity of an iPod.

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