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Napster Going Under?

Wednesday, January 18th, 2006 at 1:30 PM - by Staff

Digital Music News is reporting that the digital music subscription service, Napster, is in a dire financial situation, and that massive layoffs are imminent. Company executives may even be planning exit strategies that include a fire sale, or liquidation. In contrast, Apple's iTunes Music Store has scored 83 percent of the legal music download market.

Despite the fact that these reports supposedly come from within the company, Napster representatives are denying that executives plan to sell or liquidate the company. A company spokesperson commented "[There are] no imminent plans for significant layoffs."

Napster's shares aren't faring too well right now. Currently, the company's stock is trading at less than half of its 52-week high, at US$3.20.

Chris Gorog, Napster's CEO, commented to ZDNet that his company is actually doing fine. He claims that the company has doubled the number of subscribers in the past 12 months. Unlike the iTunes Music Store, where users purchase and download songs al-a-carte, Napster uses a monthly subscription model. Subscribers that fail to pay their monthly fee lose their music.

Mr. Gorog stated "With a track record of robust growth, exciting new developments in the pipeline and over $100 million on our balance sheet, we are extremely excited about the future of Napster."

If Napster actually is failing, it will mark only one in a long line of music providers that was unable to compete with Apple.


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