Legal version of Netco launched three years ago
With its balance sheet still stuck in the red and competition from deep-pocketed player Microsoft looming, Napster has retained investment bank UBS to explore a strategic partnership or sale.The new, legal version of Napster launched three years ago and has struggled to find a successful niche against the multitude of competitors, most notably Apple’s iTunes. After starting off selling tracks for 99¢ and offerings subscriptions, it soon switched to a model focused on subscriptions. More recently, it started offering free streaming music on its Web site, supported by advertising. It also has been particularly active in making deals for mobile distribution. Though it has been moving in the right direction, company is still far from profitability. Last quarter, it lost $9.6 million on $28.1 million in revenue. Company has 512,000 subscribers, putting it well behind competitors such as Rhapsody, which has more than 1.5 million. Microsoft is gearing to launch its own digital music service, Zune, in the next couple of months. That will make it even harder for independent players like Napster to stand out. In addition to its modest subscriber base, Napster would be able to offer any potential partner or buyer one of the best known names in digital music and a cash horde of $97 million.
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