Napster's Future

Chicago Tribune: (reg. req.) A good overview story on the current incarnation of Napster. And it is not that good: When Napster releases Q2 results Wednesday, it is expected to have added 25,000 subscribers, a sharp deceleration from the 86,000 full-paying ones added in the previous quarter. Excluding seasonal university clients, Napster has about 381,000 full-paying subscribers.
Analysts expect Q2 revenues to total $20 million. But nearly $16 million of that goes directly to the record companies as royalties. All told, Napster is likely to have burned through $27 million, $20 million of that for marketing. With $132 million in cash at the end of March, and going through about $27 million a quarter, Napster has roughly until late 2006 to significantly improve its operating margins or risk imploding.