PC music download service
Napster LLC has raised its guidance for it current fiscal quarter — the company expects to report revenues of US$15 million, compared to its previously offered guidance of $14 million. The company didn’t disclose its earnings expectations for the quarter, which ends March 31, 2005 — analysts are expecting a loss of about 63 cents per share.
Napster CEO Chris Gorog said the revised guidance is the result of what he called “robust growth” in the company’s subscription service. In February Napster launched Napster To Go, a subscription service that allows Napster subscribers to download as much music as they want for $15 per month.
“Our new marketing campaign is already delivering strong returns by generating unprecedented interest in both our regular and portable music subscription offerings,” said Gorog in a prepared statement. Napster has focused its advertising on comparing the cost of using Napster To Go to the cost of filling an Apple iPod with music downloaded from the iTunes Music Store.
Critics claim Napster’s comparison is specious, since few users are likely to fill their iPods only with music they’ve bought online. Napster To Go has also been criticized for its limited compatibility with digital music players; only a handful of players work with the service. And if users let their Napster To Go subscriptions lapse, they’re locked out of playing their music — unlike iTunes and other “a la carte” download services.
Increased growth for Napster could be a harbinger of things to come, however: Napster To Go is the first major application to use Microsoft Corp.’s vaunted Janus Digital Rights Management (DRM) technology. Other music download services in the Windows space will follow suit later this year.
Wall Street sat up and took notice: Napster’s stock saw a rally on Thursday. Though it had lost its momentum by the end of the day and closed at 7.27, shares jumped as high as $7.70. Napster stock was at $7.45 in pre-market trading on Friday. Following Napster’s announcement, Apple stock took a hit — opening at above $44, the stock closed on Thursday at $41.79. Apple’s stock was $42.63 in pre-market trading on Friday.