The music retailer posted a smaller than expected 10 cent-per-share loss as it added about 17,000 new subscribers to its subscription service.

Big strides have been made in efforts to pare losses. The company lost $4.3 million in the three months ending March 31, about half of its $8.5 million loss in the year ago quarter.

Revenues were also up, albeit slightly. The company made $30.8 million during the quarter, up about six percent from a year ago. Such slow growth may have a lot to do with the company's recent announcement of its MP3 store.

Napster announced back in January that it would return to selling MP3s, which play on any player -- including the ubiquitous iPod and the iPhone -- in a move to expand its customer base. With its inventory of tracks expanding to six million, it's not a far-fetched prediction far-fetched that the company could see large gains in the quarter to come.

By the books, Napster is not holding its breath though: It's only forecasting revenues of $30 to 31 million. The Street is a bit more bullish, as analysts polled by Reuters expect revenues to be around $31.6 million.

A narrower loss is still a loss, investors decided Thursday, as Napster stock on the NASDAQ lost over 10% of its value by 10:30 am EDT, before settling back to about a 9% loss by 2:10 pm EDT.