Napster continues slow growth

Company reports revenue of $28.4 million

Digital musicstore Napster continued its slow growth path last quarter in anticipation of a big boost this spring after it closes a deal to get over 300,000 new customers from AOL.

Company reported revenue of $28.4 million, up 21% from a year ago. However, much of the boost came from $2.4 million in non-recurring revenue, such as prepaid cards that were never used. Without that, revenue was up a more modest 11%.

Revenue was in line with January revised guidance. However, at the time Napster didn’t reveal the impact of non-recurring revenue, which may have contributed to a 6% decline in the Netco’s stock in after-house trading.

Napster’s net loss declined 44% from the same quarter a year ago to $9.5 million.

Company added only 48,000 net subscribers worldwide last quarter, bringing its total to 566,000.

In January, Napster agreed to pay AOL $15 million to get access to the approximately 350,000 subs to its MusicNow service. Switchover is expected to happen in late March and should provide a significant boost to Napster’s second quarter earnings, the first on its fiscal calendar.

Company also announced that Ross Levinsohn, formerly the head of Fox Interactive Media, the News Corp division that oversaw MySpace, IGN and other websites, has joined its board of directors. It’s Levinsohn’s first significant move since ankling Fox late last year.

Napster shares closed up 3% at $4.09 before earnings were announced.

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