AOL Sells 350,000 Subscribers to Napster for $15 Million

Posted Jan 13, 2007

Yesterday, AOL had agreed to sell AOL Music Now to Napster for $15 million.  Napster would absorb AOL Music Now’s 350,000 subscriber client base.  After that, Napster would have 916,000 subscribers.  Before the transaction, Napster was worth about $186 million, but now with the value-added 350,000 subscribers, the valuation is expected to jump by another $100 million.

“AOL is treating this like a nonessential business,” stated Fred Moran, a Stanford Group analyst.  After the announcement was made, Napster, Inc. (NASDAQ: NAPS) shares rose by 30 cents, making Napster $4.12 per share.  AOL will continue to maintain AOL Music.

It was in October 2005 when AOL had bought Music Now for a suspected amount of $10-15 million from Circuit City.  Now AOL’s music services are owned by RealNetworks.  RealNetworks is known for streaming subscription music player, Rhapsody and WinAmp competitor, RealPlayer.

Napster will also be promoted on AOL Music pages and if certain subscription targets are made by Napster, AOL would receive additional payments.