Napster Hits Record Fourth Quarter Revenues of $29.1 Million

Napster Hits Record Fourth Quarter Revenues of $29.1 Million and Completes Fiscal 2007 Leading the Industry in On-Demand Music Subscribers

Napster today reported financial results for its fourth quarter and fiscal year ended March 31, 2007.

Net revenue for the fourth quarter of fiscal 2007 grew to $29.1 million, up 9 percent from $26.8 million in the prior year quarter and up from $28.4 million in the third quarter of fiscal 2007. Net loss for the fourth quarter of fiscal 2007 was $8.5 million, or $0.20 per basic and diluted share, compared to net loss of $9.5 million, or $0.22 per basic

and diluted share, in the third quarter of fiscal 2007. Net loss narrowed $1.3 million in the fourth quarter of fiscal 2007 compared to the same quarter of fiscal 2006 excluding the after-tax impact of a $5.4 million gain from the sale of the consumer software division as recognized in the fourth quarter of fiscal 2006.

Net revenue for the fiscal year ended March 31, 2007 was $111.1 million, up 17% from $94.7 million in fiscal 2006. Net loss for fiscal 2007 was $36.8 million, or $0.85 per basic and diluted share, compared to net loss of $54.9 million, or $1.28 per basic and diluted share, in fiscal 2006.

“Napster concludes fiscal 2007 as the most popular on-demand music subscription service with healthy annual revenue growth and a significant decline in cash burn,” said Chris Gorog, chairman and CEO. “Looking ahead to fiscal 2008, the company will remain deeply focused on bottom-line improvement and will continue to capitalize on our strong market share position as we enter the new era of music-enabled cell phones. We expect this trend to be a substantial contributor to Napster’s future growth based on our partnerships with the leading wireless carriers and handset manufacturers worldwide.”

At the end of March 31, 2007, Napster’s total worldwide paid subscriber base was 830,000, including university subscribers, Napster Mobile subscribers, Napster Japan subscribers and the AOL Music Now subscribers who transitioned in March 2007. The number of paid subscribers grew 47 percent from the third quarter of 2007 and 37 percent year over year.

Napster ended fiscal 2007 with a total of $66.5 million of cash, cash equivalents and short-term investments.