Napster Claims 500K Premium Subscribers

Formerly rogue file-sharing service Napster claims more than 500,000 users have subscribed to its premium (and legal) online music service.

The online digital music service Napster said today it had surpassed 500,000 premium paid subscribers, as well as an additional 50,000 subscribers through its Napster University Program. The subscriber numbers means Napster has more than doubled its subscriber base in the last year.

“Doubling our subscribers over the last twelve months demonstrates the mass market potential of our music subscription model and the powerful appeal of Napster to music fans who want it all,” said Chris Gorog, Napster chairman and CEO. “With a track record of robust growth, exciting new development in the pipeline and over $100 million on our balance sheet, we are extremely excited about the future of Napster.”

Others aren’t so sure: the company has been mum on persistent rumors of pending job cuts, a second shut-down, or a sell-off to a larger entity. Indeed, Napster has had difficulty leveraging its once ubiquitous brand name to achieve significant stature in the online digital music industry, currently dominated by Apple’s iTunes Music Store. A Napster subscription is priced at $9.95 per month, with an additional $5 per month for the capability to transfer tracks to a portable device, and tracks can only be burned to audio CDs if they’re purchased for an additional fee (typically between $0.80 and $0.99 per track). Music subscription services in general haven’t seen tremendous success compared to Apple’s pay-per-song model, and the licensing fees demanded by music labels led Microsoft to scuttle its own planned music subscription service, presumably because the Redmond giant couldn’t find a way to make the business worth their time.

More details on Napster’s future are expected February 8, 2006, when the company releases financial results for its third fiscal quarter.