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Just how much is Napster actually worth? According to a mutinous group of investors, Wall Street thinks the company is worthless, and that is a serious problem.
The dissenting shareholder group, which first emerged last month, found that the street is valuing the company below its aggregated assets. "At today's valuation [$1.50 per share], Napster has the dubious distinction of being worth more dead than alive," the group stated. "We believe this discrepancy is a result of negative sentiment surrounding almost all music content businesses due to the unresolved effects of piracy, but also due to a lack of confidence in the way the company is governed."
The investors - Perry H. Rod, Thomas Sailors and Kavan P. Singh - have been rallying for management changes to reverse negative perceptions. The trio highlighted a subscriber base of 760,000 and a "growing, globally scalable business model and multiple revenue streams," though continued quarterly losses and stagnant consumer demand were not mentioned. "While considerable venture capital has flowed into digital music startups over the last five years, primarily into revenue-challenged experimental business models that have been largely disappointing, the market fails to discern and account for important differences that set Napster apart," the group stated.
Napster has struggled with modest subscriber uptake, though the dissenting investors outlined a different path towards wealth. The group pointed to Last.FM, recently valued at $280 million by CBS Corporation as part of an acquisition sealed last year. "Napster's intangible assets comprise a component of the enterprise comparable to Last.FM, a company with negligible tangible assets, no comparable subscription product and few, if any, paying subscribers," the group asserted.
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