Napster Inc. reported a slimmer third-quarter loss Thursday of $9.51 million (-22 cents per share), compared to a $17 million loss (-40 cents) from the same period a year earlier, beating analysts’ estimates of a 28 cent loss, according to Thompson Financial.

Sales for the Los Angeles-based Internet music seller rose 21 percent to $28.4 million thanks to more than 350,000 subscribers the company gained from the now-defunct AOL Music Now service during the quarter. Also, thanks to the better-than-expected numbers, talks continued to swirl about a possible sale or merger — Napster hired UBS AG to explore all possible options late last year and also said in its filing Thursday that it appointed Ross Levinson to its board of directors. Levinson played a key role in News Corp.’s acquisition of MySpace.com and further fueled acquisition talks for the battered digital music provider.

Napster had 566,000 paid subscribers at the end of 2006.

Shares in Napster closed up 2.76 percent (11 cents) to $4.09 Thursday but lost 6.89 percent (29 cents) in aftermarket trading to $3.81.