Technology firm RealNetworks has published its latest quarterly financial results, and as usual, they include figures for Napster, its music-streaming subsidiary. The key figure: $27.3m. That’s Napster’s revenues for the third quarter of 2019, which represents a 21.6% drop year-on-year from its $34.8m revenues in Q3 2018 (which in turn were down 18.7% on the $42.8m of revenues in Q3 2017).
One new thing from the way RealNetworks reports its figures: it now splits out Napster’s revenues into two sales channels: business to business, and direct to consumer. Napster’s B2B revenues (from streaming services it runs for other brands) were $13.1m in Q3 this year, while its D2C revenues from its own service were $14.2m. There are no comparable figures from last year, but in future filings we’ll be able to see how the two channels’ growth (or shrinkage) differs. In the company’s earnings call, CFO Cary Baker cited “declining subscribers, partially offset by higher platform partner revenue”, so it isn’t far-fetched to suggest B2B may be about to overtake D2C for Napster.
Music Ally has written before about Napster being that rare thing: a profitable music-streaming company. In Q3 2019, however, the company reported an operating loss of just under $1.2m – and an operating loss of $3.8m for the year to date. In its financials, RealNetworks announced that in August 2019 it secured a revolving line of credit of up to $10m from a financial institution, for the use of both RealNetworks and Napster. By the end of September, RealNetworks had drawn down $3.9m from that line of credit, and loaned it to Napster – on top of an existing $1.1m loan from May 2019.
For more on Napster’s strategy, read our recent interview with chief commercial officer Angel Gambino. “Transforming from a pure D2C play to D2C and B2B2C is a big challenge in terms of process systems, culture, accounting, everything. I want to give all that a good scrub so the company is in a good position to execute well,” she told us, while hinting at some big B2B partners to come. “I think there are a few companies that we’re in very advanced negotiations with right now that could significantly alter the entire streaming ecosystem. These partners working on our platform could potentially increase the overall streaming market substantially.”