LOS ANGELES, CA -- (MARKET WIRE) -- 05/21/08 -- Napster (NAPS) today reported financial results for its fourth quarter and fiscal year ended March 31, 2008.

"Napster concludes fiscal 2008 with annual revenue growth of 15%, positive cash flow throughout the fiscal year and a significant year over year improvement in bottom line results," said Chris Gorog, chairman and CEO. "Yesterday Napster launched the world's largest MP3 store, substantially expanding our available marketplace as tracks purchased at Napster are now compatible with virtually any MP3 player or music phone in the world including the popular iPod and iPhone. We believe Napster's music offerings are now the most comprehensive and easy to use in the industry, providing music fans with the option to enjoy unlimited streaming, portable subscription, a broad array of mobile offerings and now the premiere MP3 store on the web."

Net revenue for the fourth quarter of fiscal 2008 was $30.8 million, up 6 percent from $29.1 million in the prior year quarter. Net loss for the fourth quarter of fiscal 2008 was $4.3 million, or $0.10 per basic and diluted share, substantially lower than the net loss of $8.5 million, or $0.20 per basic and diluted share, in the fourth quarter of fiscal 2007.

Net revenue for the fiscal year ended March 31, 2008 was $127.5 million, up 15% from $111.1 million in fiscal 2007. Net loss for fiscal 2008 was $16.5 million, or $0.38 per basic and diluted share, a significant improvement compared to net loss of $36.8 million, or $0.85 per basic and diluted share, in fiscal 2007.

"We believe the launch of our MP3 store, the flexibility of our new web-based platform and the continued growth of Napster Mobile will drive our business in fiscal 2009 and beyond. The substantial expansion of Napster Mobile's addressable audience among AT&T customers and our latest deployment with the leading wireless carrier in the UK are exciting developments that should deliver a significant increase in mobile revenues in fiscal 2009," concluded Mr. Gorog.

Napster ended fiscal 2008 with a total of $69.8 million of cash, cash equivalents and short-term investments. Napster had approximately 760,000 paid subscribers at March 31, 2008 compared to 743,000 paid subscribers at December 31, 2007.

Business Outlook

"We expect that for the first quarter of fiscal 2009, revenue will be in the range of approximately $30 to $31 million due to typical seasonal patterns. We are also targeting relatively flat operating expenses, losses, EPS and cash flow," said Suzanne M. Colvin, Napster's interim chief financial officer.

Corporate Highlights

Napster recently:

--  Launched the world's largest MP3 download store featuring 6 million
    tracks.  All single-track and album sales are available exclusively in MP3
    format and are compatible with virtually all MP3 players and music phones
    available on the market.

--  Announced that AT&T plans to significantly expand offerings for
    Napster Mobile over-the-air downloads to more than 12 million customers
    beginning this summer.

--  Expanded Napster Mobile's global footprint with launches in the UK
    with O2 UK, the leading UK wireless carrier with more than 18 million
    subscribers, in Italy with Telecom Italia, Italy's leading mobile carrier
    with more than 35 million subscribers, and in Chile with Entel PCS, Chile's
    leading operator with more than 5.5 million subscribers.
    

Conference Call Information

The Napster fourth-quarter teleconference and webcast is scheduled to begin at 2:00 p.m. PDT on Wednesday, May 21, 2008. To participate on the live call, analysts and investors should dial 800-240-2430 at least ten minutes prior to the call. Napster will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the company's Web site at http://investor.napster.com.

About Napster

Napster, the pioneer of digital music, offers the ultimate in interactive music experiences, creating better ways to discover, share, acquire and enjoy music -- anytime, anywhere. The Company's offerings include "Napster" (www.Napster.com) -- the premier online music destination featuring the most popular on-demand music subscription service in the world and the largest, most comprehensive MP3 download store on the market; "Freenapster" (www.freenapster.com) -- a unique Web experience offering free on demand music legally; and "Napster Mobile" -- one of the industry's fastest growing mobile music platforms. Headquartered in Los Angeles, Napster's services are available in markets across the Americas, Europe and Japan.

Safe Harbor Statement

Except for historical information, the matters discussed in this press release (including the matters set forth under "Business Outlook" and Napster's expectations regarding the factors that will drive its business in fiscal 2009) are forward-looking statements that are subject to certain risks and uncertainties such as our limited operating history; failure to develop new products and services; flaws inherent in our products or services; decreased demand for our products and services; failure of our products to interoperate with the hardware products of our customers; the adoption rate of mobile platforms as a method of digital music purchase, including the rate of adoption of music-enabled cell phones compatible with the Company's service offerings; intense and varied competition; failure to maintain relationships with strategic partners and content providers; and general economic conditions; that could cause actual results to differ materially from those projected. Additional information on these and other factors are contained in Napster's reports filed with the Securities and Exchange Commission (SEC), including the Company's Quarterly Report on Form 10-Q as filed with the SEC on February 6, 2008, copies of which are available at the website maintained by the SEC at http://www.sec.gov. Napster assumes no obligation to update the forward-looking statements included in this press release.

Copyright © 2008 Napster, LLC. All rights reserved. Napster is a registered trademark of Napster, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are owned by their respective owners.

                        NAPSTER, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS
           (in thousands, except per share data)
                          (unaudited)

                                                         As of March 31,
                                                      --------------------
                                                         2008       2007
                                                      ---------  ---------
                         ASSETS
Current assets:
 Cash and cash equivalents                            $  32,628  $  30,069
 Short-term investments                                  37,164     36,414
 Accounts receivable, net of allowance for doubtful
  accounts of $16 at March 31, 2008 and $10
  at March 31, 2007                                       2,365      1,418
 Prepaid expenses and other current assets                2,289      6,547
                                                      ---------  ---------
  Total current assets                                   74,446     74,448
Property and equipment, net                               3,358      4,736
Goodwill                                                 34,658     34,658
Identifiable intangible assets, net                       3,560      7,729
Other assets                                                285        158
                                                      ---------  ---------
  Total assets                                        $ 116,307  $ 121,729
                                                      =========  =========

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                     $   1,745  $   2,231
 Accrued liabilities                                     31,166     23,574
 Deferred revenues                                        6,474      7,601
                                                      ---------  ---------
  Total current liabilities                              39,385     33,406
Long-term liabilities
 Deferred income taxes                                    4,593      3,548
 Other long-term liabilities                                 28         69
                                                      ---------  ---------
  Total liabilities                                      44,006     37,023
                                                      ---------  ---------
Stockholders' equity:
 Common stock, $0.001 par value; Authorized:  100,000
  shares; Issued and Outstanding:  46,122 shares
  at March 31, 2008 and 44,770 shares at
  March 31, 2007                                             46         45
 Additional paid-in capital                             266,447    262,730
 Accumulated deficit                                   (194,646)  (178,194)
 Accumulated other comprehensive income                     454        125
                                                      ---------  ---------
  Total stockholders' equity                             72,301     84,706
                                                      ---------  ---------
  Total liabilities and stockholders' equity          $ 116,307  $ 121,729
                                                      =========  =========



                               NAPSTER, INC.

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands, except per share data)
                                (unaudited)



                              Three Months Ended         Year Ended
                                  March 31,               March 31,
                            ---------------------   ---------------------
                               2008        2007        2008        2007
                            ---------   ---------   ---------   ---------
Net Revenues:
 Service                    $  30,716   $  28,944   $ 126,483   $ 110,380
 Product and trademark
  license                          66         189         969         701
                            ---------   ---------   ---------   ---------
   Net revenues                30,782      29,133     127,452     111,081
                            ---------   ---------   ---------   ---------
Cost of revenues:
 Service                       22,336      20,357      89,716      76,203
 Product and trademark
  license                         294         812       1,390       2,443
                            ---------   ---------   ---------   ---------
   Cost of revenues            22,630      21,169      91,106      78,646
                            ---------   ---------   ---------   ---------
Gross margin                    8,152       7,964      36,346      32,435
                            ---------   ---------   ---------   ---------
 Service gross margin %            27%         30%         29%         31%
 Product and trademark
  license gross margin %         (345)%      (330)%       (43)%      (249)%
   Gross margin %                  26%         27%         29%         29%
Operating expenses:
 Research and development       2,357       2,923       9,685      11,045
 Sales and marketing            4,442       6,043      17,963      34,213
 General and administrative     5,418       6,659      23,284      24,311
 Amortization of intangible
  assets                          680         271       4,169         271
                            ---------   ---------   ---------   ---------
   Total operating expenses    12,897      15,896      55,101      69,840
                            ---------   ---------   ---------   ---------
Loss from continuing
 operations                    (4,745)     (7,932)    (18,755)    (37,405)
Other income, net                 787         680       3,458       4,018
                            ---------   ---------   ---------   ---------
Loss before income tax
 provision                     (3,958)     (7,252)    (15,297)    (33,387)
Income tax provision             (340)       (291)     (1,155)     (1,257)
Loss from unconsolidated
 entity                             -           -           -      (1,991)
                            ---------   ---------   ---------   ---------
Loss from continuing
 operations, after income
 taxes                         (4,298)     (7,543)    (16,452)    (36,635)
Loss from discontinued
 operations, net of tax
 effect                             -        (953)          -        (191)
                            ---------   ---------   ---------   ---------
Net loss                    $  (4,298)  $  (8,496)  $ (16,452)  $ (36,826)
                            =========   =========   =========   =========

Basic and diluted net loss
 per share:
    Net loss per share
     from continuing
     operations             $   (0.10)  $   (0.17)  $   (0.38)  $   (0.85)
    Net loss per share
     from discontinued
     operations             $       -   $   (0.03)  $       -   $       -
                            ---------   ---------   ---------   ---------
Basic and diluted net loss
 per share                  $   (0.10)  $   (0.20)  $   (0.38)  $   (0.85)
                            =========   =========   =========   =========
 Weighted average shares
  used in computing net
  loss per share
    Basic and diluted          43,631      43,239      43,537      43,187
                            =========   =========   =========   =========