Along with about 6 other people, I’m a subscriber to Napster (kidding, they have a few hundred thousand users). As someone that sits in front of a computer for the better part of the day, an unlimited streaming plan makes sense for me, since I can listen to as much music as I want. Generally speaking, I’m also fairly pleased with Napster's selection and their ability to get new releases in a fairly timely fashion.
In any event, I just received an email from the company to its customers indicating they are raising prices, from $9.95/mo to $12.95/mo. In addition, they are offering users a way to pre-pay for a full year and save some cash $119.40 for an annual subscription (in other words, putting more money in their bank account right now as opposed to over the next year). From the email:
"For the first time in over four years, we are increasing the Napster monthly subscription fee from $9.95 to $12.95. This change will take place beginning on January 30, 2008. As a valued member, we would like to extend a special offer to keep your existing monthly rate."
Is this a sign of trouble at Napster? Maybe. Last month, the company’s CFO resigned as shares hit a new all-time low (they have since gone even lower). The company lost nearly $10 million in its most recent quarter, meaning with about $65 million of cash in the bank, Napster only has about 18 months until it will need to either raise more money or go bankrupt at its current pace.