The software company that exhumed Napster and resurrected it as a successful pay-to-play online music download site is all but becoming Napster. Roxio has agreed to sell its software division to Sonic Solutions in an estimated $80 million cash and stock deal to concentrate entirely on Napster – and it will change the corporate name to Napster once the deal is finished.
The Roxio software division included producing Easy Media Creator and Toast, and will be sold to Sonic for $70 million cash and $10 million in stock, a deal Roxio chief Chris Gorog said would produce over $100 million in cash to fuel Napster’s growth, particularly to more college campuses and into other markets in the coming months.
"We are on the path to becoming a very well-funded pure play in one of the hottest sectors in the consumer technology market," Gorog told a conference call August 10. Roxio was said to have shown a $2.6 million loss at the end of the fiscal first quarter of the year, compared to a $370,000 loss shown for the same period in 2003.
The granddaddy of the peer-to-peer file-swapping world, Napster was brought to its knees and all but terminated by various court actions accusing it of active copyright infringement. Roxio bought Napster’s shell from Bertelsmann in 2002 and brought it back as an online music store to strong enough success – but also to bristling market competition from Apple’s iTunes Music Store. Sony has unwrapped its own online music store and Microsoft is anticipated to be preparing one for an autumn launch, according to several reports.
Napster is reportedly hinging its coming growth on new-generation digital music players, especially when the ones powered by Microsoft’s Janus technology – allowing consumers to pay flat monthly subscription fees – arrives in the coming months. Napster is expected to charge a $20 per month or less such fee, for unlimited music transfers to portable players.
"We…have little question that the Windows Media Audio format will be pervasive during the mass adoption phase of digital music over the next few years," Gorog told the conference call.
