Napster (Nasdaq: NAPS) reported its Q2 numbers, and it still keeps plugging away, with some surprises: its losses narrowed as it generated record revenues and managed to lower customer acquisition costs. It has losses of $4.2 million this quarter, after a loss of $9.8 million in the year-ago period. Revenues increased 15 percent to $32.3 million from $28.1 million in the year-ago quarter.

Napster said it has been scaling back marketing expenditures and, as a result, lowered its subscriber acquisition spending to an all-time low, reports AP. But Napster has about 770,000 subscribers. Excluding a seasonal decrease of 40,000 university subscribers, its paid subscriber base declined 2.5 percent during the quarter. The subscriber decline was partially offset by the addition of mobile service subscribers, the company said. More in release.