Despite rumors of its demise, Napster said on Wednesday that its subscription service had surpassed 500,000 subscribers, including some 50,000 non-paying college users.

Earlier in the week, Web log Digital Music News cited sources within Napster who painted a much less rosy picture of the company. According to the alleged source, layoffs are imminent and executives were looking into exit options.

The speculation came as Apple reported that it continues to see gains in its market share, claiming 83 percent of total digital music sales and leaving very little wiggle room for companies like Napster.

Questions about the story are sure to be asked during the company's third quarter financial results call, presently scheduled for February 8.

Nevertheless, Napster's subscriber base has grown by 100 percent over the past year. And Chris Gorog, the company's chairman and CEO, says Napster is running on all cylinders.

"With a track record of robust growth, exciting new development in the pipeline and over $100 million on our balance sheet, we are extremely excited about the future of Napster," he announced.

Last quarter, the company reported a USD $13.6 million loss or 32 cents per share, compared to a $16.6 millilon loss or 46 cents a share in the year ago quarter.