Napster shareholders want more Monopoly money

Cyndy Aleo-Carreira — Fri, 27 Jun 2008 18:03:42 -0700

In one more case of the shareholders attempting to run the asylum, the Napster shareholders/subscribers who launched a proxy fight to gain a seat on the board are arguing that Napster is undervalued, according to paidContent. Their rationale? If CBS was willing to pay $280 million for last.fm, then Napster should be valued at least the same, if not higher.

In the filing submitted to the SEC, the three shareholders (who own a total of 1.4% of Napster shares) argue that the company is valued only at the amount of cash on the balance sheet, approximately $70.7 million, less than 1/3 of the purchase price paid for last.fm.

Not factoring into the issue, apparently, is site traffic. A quick glance at Compete (see chart below) shows Napster traffic off almost 30% for the year, while last.fm is on the upswing. Even taking into account a margin of error, last.fm shows approximately 500,000 more users in the month of May. While it may seem obvious to most that a site gaining users by the year is worth more than those not gaining users, the Napster shareholders argue that paid subscriber numbers are more important. Of course, if those paid Napster subscribers were to migrate to last.fm following the trend, then Napster wouldn't even have that going for it. It may simply be that the brand is too associated with the days of illegal filesharing to reinvent itself, no matter how hard it tries.

More news, commentary, and predictions from The Industry Standard:

Prediction: iTunes goes DRM-free by the end of the year
News: Topspin Media to music labels: drop dead
News: Briefly: Warner Music dumps Last.fm

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Napster shareholders want more Monopoly money