Napster’s Back as Trading Begins on Nasdaq

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Los Angeles-based file-sharing pioneer Napster Inc. returned to the public eye on Monday with its Nasdaq debut, falling about 5 percent in mid-afternoon trading.


The controversial company popularized free music downloads before filing for bankruptcy protection in June 2002 under the weight of record company lawsuits alleging copyright infringement and piracy. Napster allowed nearly 60 million users to download music from each other for free, triggering wholesale devaluations in music-company properties.


Napster’s name and its software were acquired in November 2002 by Roxio Inc., a northern California software maker, for about $5 million in cash and 100,000 stock warrants. Roxio sold its existing businesses last month to focus on creating a legal music-sharing platform for Napster, with a paying subscriber base.


Since August, when Roxio announced its plans, the company’s shares have surged. With the name change to Napster and trading that began Monday under the new ticker symbol NAPS, the transformation became complete. At a price of $8.93 a share in mid-afternoon, the company was valued at about $310 million.


Speaking on CNBC, Napster Chief Executive Chris Gorog said Napster would have $35 million to $45 million in revenues for the fiscal year that ends in March with subscriptions making up 75 percent of the total. The company offers unlimited music downloads for a monthly fee of $9.95.


While Gorog would not provide profit projections for the coming year, he did say, “We are well on our way to being cash flow break-even.” The company posted 33 percent sequential revenue growth to $11 million in the quarter that ended Dec. 31, he said. “You have to look at it in the grand scheme this is a multibillion business over the next few years.”

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