Blog Post

Not A Great Day To Have Stock In Real, Napster

Or to have a music IPO, for that matter. The beta launch of Yahoo Music Unlimited at the bargain-basement annual rate of about $50 a year — less than half of that being charged by Real and Napster for their unlimited/portable subscriptions — is sending shudders through the sector. At midday, RNWK is down 21.23 percent to $5.75 while NAPS has lost 30 percent, down to $4.40. Yahoo didn’t gain a halo, though; it’s actually down slightly to $33.92.
Meanwhile, Warner Music’s IPO, repriced $5 lower yesterday, got a great sendoff this morning with Jimmy Page playing guitar to ring the NASDAQ bell — and then came right back to earth. WMG opened at $15.75, went to a high of $16.20 and is now at $16.11; the offering price was $17. Investors are uncertain about digital music technology and how it will affect the labels. WMG seems poised to take advantage but not a lot of investors seem to put much value in that today.
I don’t hold any stock but today could be a good shopping day for people who believe in digital music.
Update: As for Apple, iTunes doesn’t offer unlimited downloads or portability; it’s pay for downloads (and retain ownership) all the way. AAPL is down 4.78 percent to $34.78 now after dropping as low as 9 percent. (It’s still up a hefty amount over the $12.97 price the stock was fetching last May.) Piper Jaffray analyst Gene Munster told MarketWatch: “We have seen over the last two years that the success of online music services is driven by compatible devices. In other words, the risk to Apple is a killer new MP3 player, not a new online music service.”