More music fans signed up for Napster Inc.'s digital music offerings in the first three months of this year, boosting revenue and helping the online music retailer cut its fiscal fourth quarter loss by nearly half.

The Los Angeles-based company said Wednesday it posted a loss of $4.3 million, or 10 cents per share, in the three months ended March 31. That compares with a loss of $8.5 million, or 20 cents per share, in the year-ago quarter.

Revenue rose 6 percent to $30.8 million from $29.1 million.

Analysts polled by Thomson Financial expected a loss of 13 cents per share on $30.7 million in revenue.

Napster said it closed the quarter with about 760,000 paid subscribers worldwide, up from 743,000 at the end of December.

The company forecast its first-quarter revenue will range between $30 million and $31 million, with earnings per share to be relatively flat.

"Napster concluded our fiscal 2008 with significantly improved financial results and innovative new product releases that will substantially expand Napster's available market in the coming year," Napster Chairman and Chief Executive Officer Chris Gorog told analysts.

Napster's core business is a monthly music subscription service that lets users download copy-protected tracks and transfer them to certain portable devices, including mobile phones. The company also lets users stream tracks on a limited basis and also purchase music downloads on an a la carte basis.

Beginning last year, the company has taken steps to expand its mobile music offerings and make its service Web-based.

This week, the company began selling music downloads as unprotected MP3 files _ making Napster's a la carte downloads compatible with iPods and virtually all digital music players.

"These important enhancements to our product lineup all work together to provide a strong and flexible foundation for further growth," Gorog said.

Napster is hoping its new all-MP3 download store will entice some buyers to sign up for its subscription service and also drive purchases by music fans with MP3-capable mobile phones _ a key market because mobile phone sales have easily outpaced digital music player sales. Continued...