Everyone into MP3 and music downloads is familiar with Napster. They’re the company that famously offered the sharing of music on a grand scale, the sort of system that music industry experts feared happing when MP3 was invented. They had a famous and much publicised court case and then returned some time later, all legit.

Now Napster is a proper company, offering a legal service for music downloads.

This Thursday however their shares fell due to analysts lowering their price targets and issuing concerns after their forth quarter reports.

The shares have fallen 16 cents in the past year, 9.5%.

Napster claims their losses have narrowed due to the increased number of subscribers they have picked up and are predicted their first quarter revenue to be just below what the analysts expected.

On Tuesday Napster launched an MP3 music download store, which offers MP3 downloads free of copy protection. This means Napster will now be offering a mix of subscription services and MP3 downloads.

It is feared however that increasing music royalty costs could spell serious trouble for Napster going forward.