Napster ended the last financial year with a record number of subscribers, and yet still posted a net loss of $8.5m (4.25m). The good news though for the music download service is that it has put in place a new marketing strategy to keep costs down, and to start making money.

Napster CEO Chris Gorog told analysts that Napster is in its strongest position since launching three years ago.

"As we head into fiscal 2008, we are acquiring customers cheaper and keeping them longer. We are growing revenues while reducing expenses. We are attracting more world-class partners than we ever have before," Gorog said

"We believe music phones will replace standalone MP3 players, and Napster stands to gain substantially from this shift, as we will, for the first time, have a massive device ecosystem to attach to," Gorog said.

Positive future

So while Napster is still deep in the red, revenue is up and expenditure is down. Which means that the operation should be profitable within a few years.

Napster offers music tracks for 79p each. It also enables you to download unlimited numbers of PC-based tracks for £8.95 per month. You can also download tracks for use on any device for £14.95 per month.