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Napster subscriber tally tops 410,000

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Napster's subscriber base reached 410,000 during its most recently completed fiscal quarter, Q4 FY2005, the company said today in advance of its formal earnings announcement.

During the three months to 31 March 2005, the digital music purveyor grew its subscriber base by 143,000 individuals, of which 12,000 joined through the company's US university programme designed to help colleges wean students off the likes of Kazaa and co. The increase represents a 53.5 per cent jump over the previous quarter's total.

On the back of the increase in subscriber numbers, Napster today upped its Q4 FY2005 revenue forecast from to $16.5-17.5m, up from the $15m it predicted last month, itself an increase of $1m on the company's previous guidance.

Still, there will be much to probe when Napster publishes its Q4 figures on 11 May. How do its subscriber numbers segment between its vanilla offering and Napster To Go, the more expensive, higher margin service which allows users to transfer downloaded songs to a portable player at no extra cost? Napster didn't provide such a break-down today.

Then there's CEO Chris Gorog's mysterious comment: "We were also delighted to see that our new Napster To Go subscribers exhibited a strong appetite for purchasing pay-per-download music as well."

So, customers who have taken out an unlimited download subscription package are also buying one-off downloads too? If subscribers are really paying for songs twice - once as part of the subscription, and a second time for the a la carte download - it suggests that they do indeed appreciate the fact their subscription downloads will effectively vanish should they ever cancel said subscription. They're clearly buying separately songs they want to keep.

That may be good news for Napster or bad. It's good news in as much as it's clearly increasing its average revenue per subscriber figure at the moment. But there's the possibility that buyers will drift toward the lower-margin a la carte model when they start see how many songs they're buying twice.

Customers clearly see the value of taking out a subscription - presumably to sample new music - but they also know that there may come a time when they don't want to continue paying out month after month. That may herald a drop in subscription revenue that Napster can ill afford. ®

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