Along with about 6 other people, I’m a subscriber to Napster (kidding, they have a few hundred thousand users). As someone that sits in front of a computer for the better part of the day, an unlimited streaming plan makes sense for me, since I can listen to as much music as I want. Generally speaking, I’m also fairly pleased with Napster’s selection and their ability to get new releases in a fairly timely fashion.
In any event, I just received an email from the company to its customers indicating they are raising prices, from $9.95/mo to $12.95/mo. In addition, they are offering users a way to pre-pay for a full year and save some cash $119.40 for an annual subscription (in other words, putting more money in their bank account right now as opposed to over the next year). From the email:
“For the first time in over four years, we are increasing the Napster monthly subscription fee from $9.95 to $12.95. This change will take place beginning on January 30, 2008. As a valued member, we would like to extend a special offer to keep your existing monthly rate.”
Is this a sign of trouble at Napster? Maybe. Last month, the company’s CFO resigned as shares hit a new all-time low (they have since gone even lower). The company lost nearly $10 million in its most recent quarter, meaning with about $65 million of cash in the bank, Napster only has about 18 months until it will need to either raise more money or go bankrupt at its current pace.
With free competition in the streaming music space from companies like Imeem who are forging revenue-share deals with the labels, Napster’s latest business model may also die, much like the original p2p service.
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