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Napster admits 10 layoffs
Company issues statement saying its move to its new Web-based initiative caused the cuts, but that "no additional reductions are contemplated."
One week after denying reports of possibly fatal turmoil at the company, Napster said it has cut 10 middle-management jobs but doesn't plan to lay off any more employees. The company also called reports of major layoffs and attempts to sell off the company "misleading and greatly exaggerated" and "patently untrue."
The company said the layoffs came as a result of the company's decision to emphasize its Web-based initiative, which was announced on Napster's earnings call last November and for which details are still slim.
"Consolidating the Napster subscription service with our new Napster.com initiative has resulted in approximately 10 middle-management redundancies worldwide and no additional reductions are contemplated," the company said in the statement.
But reports of major layoffs are false, the company said, noting that 10 layoffs of a workforce of 153 amounts to 6.5 percent reduction, less than widespread reports earlier today of a 10 percent reduction.
"Napster projects its headcount will actually increase over the coming year as our new Napster.com products enter the marketplace," a company spokesperson said.
The digital music industry has been rife with speculation about Napster's long-term prospects in recent weeks. Digital Music News reported last week that massive layoffs were imminent and that company officials are "considering various exit options, including a fire sale or liquidation."
Earlier this month, PaidContent.org said it was told that RealNetworks, whose Rhapsody is the clear leader in the subscription space, and possibly MSN Music might be interested in acquiring Napster.
At the annual Midem music industry conference in Cannes, France, this week, Gabriel Levy, head of music in Europe for RealNetworks, said consolidation could be in the cards.
"I don't imagine all these services can last," he said. "Some will go out of business or be consolidated."
But Napster today denied that the company is being shopped around, pointing to its announcement last week that it had passed the 500,000 subscriber mark.
"We suggest that 100 percent year-over-year revenue growth, 500,000 subscribers, and the number two market share position in the industry should speak for itself in terms of the company's health and prospects," the company said.
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