According to an article on Mercury News, Roxio is in some serious problems with it's legal music download service Napster . Napster has lost 15 million dollars in the first 2 months of operation. Top executives such as the president, the chief financial officer, the vice president of programming and the head of corporate communications are leaving the boat. Also, HP surprisingly canceled the agreement to install a link to Napster's online music service on its computers. Instead HP made an agreement with Napster rival Apple to feature it's iTunes store on HP computers and sell Hewlett-Packard branded iPod music players.
On Wednesday, Roxio began laying off people at its Napster division. A Roxio spokeswoman said the company was "eliminating redundancies in the organization'' but declined to say how many people lost their jobs. "I think it's a very competitive market with very ugly economics and there's just no money in the download business,'' said Steven B. Frankel, managing director of Adams, Harkness and Hill, a Boston investment bank. Napster declined to provide specific subscriber numbers for its service, aside from noting that downloads and subscriptions each contributed equally to Napster's $ 3.6 million in revenue for the last three months of 2003. That means Napster has attracted about 90,000 subscribers in its first two months -- ranking it fourth, behind RealNetworks' Rhapsody service, America Online's MusicNet and MusicMatch. |
Still, Gorog, chairman and chief executive of Napster, is positive as he expects the business will mature when users realize, that it's cheaper to pay a flat fee for access to 500,000 tracks than to pay $ 1 for one song.
Source: Mercury News
