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EMUSIC.COM REVENUES UP, LOSSES DOWN

At This Rate, Company Should Be Profitable By 2020
Licensed digital music seller EMusic.com, one of the companies expected to flourish with the demise of Napster, had fourth quarter revenues of $3.8 million, a 20% increase over the previous quarter. The company's pro forma net loss for the quarter ending June 30 was $13.6 million, or 34 cents per basic and diluted share, compared with a net loss of $14.6 million in the preceding quarter and $2.8 million in the same quarter last year. Adding in charges related to stock compensation and amortization of intangible assets, the quarterly net loss grew to $25.7 million—almost as much as Napster spent in legal fees—compared with a net loss of $11.6 million in the same quarter last year.

EMusic President/CEO Gene Hoffman tried to sell us shares at $1 apiece before commenting: "EMusic continues to make excellent progress towards profitability. We have been able to continue our strong revenue growth while implementing significant cost controls, the benefits of which will only begin to show in our quarterly results ending September 30. And, if you believe that, I have some swampland in Florida to show you."

EMusic's online advertising and sponsorship revenue increased 24% over the previous quarters, with clients like American Express, Anheuser-Bush, Ford, GM, Microsoft, Sony, Polaroid and Tommy Hilfiger. This week, the company launched "EMusic Unlimited," a new digital music subscription service and recently signed an agreement with Hewlett-Packard to bundle EMusic MP3s and subscription services with all new HP CD-Writer products.

Since it was founded in January '98, the company has sold 2 million MP3 tracks, with more than 125,000 songs by over 7,300 established artists and more than 600 labels in its digital music catalog. They also have a joint partnership with RollingStone.com.

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