Napster’s losses have dropped to $9 million for the second three months of 2006 from $13.6 million 12 months previously. Good news came in the form of 42% rise in unique visitors (to and revenue rising to $25.5 million. Napster has launched an ad-supported subsidiary business alongside its Windows Media-based subscription service. Unfortunately, the ad-based service is sucking subscribers away though Naapster spins it as them trying before the they buy into the ‘premium service’.

Company chief Chris Gorog points to the mobile platform – Napster’s launched a service in Japan and the US – as the light at end of the tunnel: “It would be difficult to overestimate how important we believe the Windows Media Audio music phone ecosystems will be to catalyzing the growth of our business.”

That said the biz is still up for sale.