Mercury News: Napster Losing Money & Top Executives

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If youire looking to download music, legally at least, your choices have never been better; the number of such services seemed to expand almost daily. It could be, however, that the salad days of iTunes Music Store wannabes, or at least one fairly prominent wannabe, are numbered.

The San Jose Mercury News is reporting that the newly reborn Napster is hemorrhaging money and top executives alike, despite being the #2 music download service. The newspaper also said that the company lost the deal with HP to provide a music link on HP computers, a deal that Apple eventually won. According to the Mercury News, HP backed out of the deal not long before it the was announced that Apple would provide music players and services to HP. From the article:

But in the days leading up to Napsteris re-launch in late October, HP suddenly -- and without explanation -- returned Napsteris $250,000 check and canceled the agreement to install a link to Napsteris online music service on its computers. Worse, in January HP announced a surprise partnership with Napster rival Apple Computer to feature the iTunes Music store on HP computers and sell Hewlett-Packard branded iPod music players.

Neither HP nor Napsteris parent company, Roxio, would comment on the soured deal, whose details were confirmed by sources familiar with the agreement. But its collapse was one of several setbacks since the reintroduction of Napster, the pioneering song-swapping renegade, as a paid music service.

Napster is losing money, and top executives have left the company, including its president, chief financial officer, vice president of programming and head of corporate communications as well a key board member. On Wednesday, Roxio began laying off people at its Napster division. A Roxio spokeswoman said the company was ``eliminating redundancies in the organizationii but declined to say how many people lost their jobs.

The Mercury News also reports that Napster lost US$15 million in the its first two months of operations, and that the service has some 12% of the market. According to the article, Apple has 56% of the market, while Apple claims 70%. You can find much more information in the full article at SiliconValley.com.

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