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Napster revenues down, but unlike music-streaming rivals it’s profitable

Music-streaming service Napster is on track to record a net profit in 2018, despite its revenues having dropped by nearly 28% since the company’s peak in 2016.

Napster recorded net profits of $4.4m and $2.1m respectively in the first two quarters of this year, although its $76.5m revenues for the first half of 2018 compare to $106m in the comparable period in 2016.

This is based on Music Ally’s analysis of figures provided by technology firm RealNetworks in its own quarterly and annual financial results.

RealNetworks owns a 42% stake in Rhapsody International Inc, having launched Rhapsody as a joint venture with MTV Networks in 2007, before spinning it off as an independent company in 2010.

Rhapsody bought Napster in 2011 from its previous owner, US retailer Best Buy, operating it outside the US while retaining the Rhapsody brand in the US – until 2016, when the latter was rebranded as Napster.

RealNetworks publishes quarterly financial metrics for the streaming service, as a result of its stake: revenues and profit/loss figures, although not any metrics for Napster’s subscribers.

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Napster revenues are down by nearly 18% year-on-year

Music-streaming service Napster saw a notable year-on-year decline in its revenues last quarter, according to its latest financials. The company’s revenues dropped from $44.1m in the second quarter of 2017 to $36.2m in the second quarter of 2018, according to figures shared by RealNetworks, which retains a 42% stake in Napster’s parent company Rhapsody International.

What’s more, in Q2 2016 Napster’s revenues were $53.5m, so they’ve dropped by just under a third in the last two years. On the plus side, Napster is now a profitable music-streaming service (and how often do we get to write that sentence?). In the second quarter of 2018 it recorded an operating profit of $3.9m and a net profit of $2.1m, compared to losses of $4.8m and $7.7m respectively in Q2 a year ago.

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Napster is profitable… but its revenues are falling

A profitable pureplay music-streaming service? Don’t fall off your chair in wonder at the thought. Napster is the company in question: it reported a net profit of $4.4m for the first quarter of 2018, compared to a net loss of $5.6m in the corresponding quarter of 2017.

That’s the good news, but now for the not-so-good news: Napster’s revenues also fell fairly sharply year-on-year. The streaming service generated $40.3m of revenues in Q1 2018, down 15.1% from the $47.5m it reported for Q1 2017. These figures come from the latest quarterly financial results of RealNetworks – published in early May – which continues to hold a 42% stake in Rhapsody International Inc, which now does business as Napster.

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Music-streaming trends, from A&R to global/local evolution

At today’s Midem conference in Cannes, a pair of afternoon sessions at the event’s ‘Streaming Summit’ focused on some of the evolving trends around the music-streaming world.

The first explored the question of whether streaming services are “the new A&Rs”, with a sparky (if, unfortunately, all-male) panel including Epidemic Sound CEO Oscar Hoglund; Playground Music Scandinavia A&R / label manager Patrik Larsson; 7digital deputy CEO Pete Downton and Mom + Pop Music co-president Thaddeus Rudd.

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Napster appoints Bill Patrizio as president and CEO

Streaming service Napster has a new, permanent boss. Bill Patrizio is no stranger to the company though: he was named as interim CEO in May 2017, while retaining his position as president of consumer media at RealNetworks – which continues to hold a stake in Napster.

“He has led a resurgence of the company in its new partner-oriented focus,” said co-chairmen Rob Glaser and Jason Epstein in a statement. “Bill has a track record of resilience and operational success, and a passion for the industry that will lead Napster forward into its next phase of innovation and growth.”