Napster Slowly Moving from Pirate to Profit

Dennis Faas's picture

Although many music fans -- especially those of the eye-patch-wearing pirate variety -- long ago dismissed Napster, the company is beginning to build momentum as a legal download site.

Since it was hammered by the RIAA a few years ago, Napster has shifted from its illegal peer-to-peer roots to a more iTunes-like interface. It appears to be stumping critics and paying off, with the company reporting a quarterly revenue of $28 million.

For those who might be confused about Napster's current state, realize that there have been two versions of the protocol. That older, piracy-based program was finally put to death last week, while the company's legitimate initiative continues to grow.

Think of it as a competitor for iTunes.

Napster's total cash flow, according to reports, is higher than executives imagined. The company's own predictions pegged this quarter's sales around $26 million, which it clearly trounced.

As you might expect, the profit jump has everything to do with an increase in subscribers. Napster absorbed a quarter million music fans from AOL Music Now. It also acquired some 40,000 more from its own recruiting efforts. (Source:

The future is bright for Napster, which once felt the heat of major artists like Metallica who vehemently opposed the piracy rampant on the company's illegal file-sharing protocol.

What's different?

Napster recently struck a deal with AT&T to bring its "Go Tracks" to the mobile phones. Napster's wares will appear on AT&T devices free for a year, an initiative that may undercut the sleek but expensive Apple iPhone (set for release this June). Those interested in the AT&T/Napster mobile plan should be aware of the required two-year contract.

Regardless of the technicalities, things are certainly looking up for Napster, less than a year after it reported losses of $54 million. After news of the AT&T deal, stock value shot up accordingly. (Source:

Whoever thought you could make money selling anything, legally?

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