Napster reborn! Roxio buys PressPlay

No file trading, from sound of it

By Drew Cullen, 19th May 2003

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Roxio is to relaunch Napster, on the back of today's $39m cash and stock acquisition of PressPlay, the download music service, from Sony and Universal Music.

The company is the proud owner of the Napster name and P2P file trading technology, acquired for $5m last November. But from the sound of it, there won't be much in the way of file trading, legal or otherwise: Roxio is to use the Napster brand, overseeing an "enhanced" PressPlay technology platform.

And there won't be any legal issues, as Roxio now holds download distribution agreements with all five music majors. The company already provides authorised CD burning services for PressPlay and EMI.

It seems a little surprising that Sony and Universal are willing to throw in the towel on their own online store, just when the concept of paid-for-music downloads is at last beginning to take hold with the public.

Apple's iTunes, launched last month, is a case in point. The DRM is an irritation and the audio quality has been questioned by many. But the service still claimed 2 million downloads at 99c a pop in its first 16 days. And that's a service that is launched only in the US and is accessible at the moment only to Mac users, which are - what - three or so per cent of PC owners.

But maybe Sony and Universal, especially Vivendi-owned Universal, are unwilling to stomach any more losses, estimated at least $30m. iTunes shows that the record companies can make their online money by offering their downloads through multiple stores. Just like the High Street.

Roxio meanwhile says it will spend $20m to relaunch Napster. It also expects the new business will "result in negative cash flows until the service is widely adopted". ®