Music Industry News

Napster Quarterly Revenues Drop as Shift Towards B2B Continues

Napster Quarterly Revenues Drop as Shift Towards B2B Continues

On November 6, RealNetworks, which is the parent of Napster, released its 3rd quarter financials for 2019, with revenue at the music streaming service dropping precipitously as the company shifts toward B2B.

Napster generated $27.3 million in revenue for the quarter ending September 30, down 21.6% from the $34.8 million it generated in the same period of 2018. When breaking this revenue down by type, the company’s direct-to-consumer revenue was $14.2 million while its B2B revenue was $13.1 million.

Cary Baker, who is the chief financial officer of RealNetworks, attributed the steep drop in revenue to declining consumer subscribers. At the same time, he indicated that this loss was somewhat offset by increased platform partner revenue.

As for RealNetworks as a whole, the company generated revenue of $45 million in the 3rd quarter as opposed to $17.6 million in the same quarter a year ago, with the primary difference being the acquisition of Napster. Their operating expenses also rose accordingly, from $18.2 million in the 3rd quarter of 2018 to $25 million in the latest quarter. This led to an increase in operating loss, from $4.9 million to $6.3 million.

At the beginning of 2019, RealNetworks took a majority interest in Rhapsody International, Inc., which is the owner of Napster.

The company now owns 84% of Napster, which has since begun focusing on the B2B market. Toward this end, they have signed agreements with a number of companies this year, such as Univision, MQA and GNT Inc.

Originally founded in 1999 by Sean Parker and Shawn Fanning, Napster was a pioneer in the digital music industry, allowing people to share files, especially MP3 music files. For a time, the groundbreaking concept was exceedingly popular, until it was grounded because of massive copyright infringement. It has since gone through a number of incarnations. After getting rebirthed as a legal version, BestBuy bought the cleaned-up Napster in 2011 and merged it with Rhapsody, one of the first streaming music platforms.

Among other offerings, Napster delivers music on-demand as a service to other brands, such as iHeartRadio.

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