Posted on: Tuesday, August 10, 2004

Roxio to change name to Napster

Los Angeles Times

Two years after buying Napster's name at a bankruptcy auction, Roxio Corp. has decided to bet its future on it.

Roxio said yesterday that it would sell its profitable line of digital-media software to Sonic Solutions for $70 million in cash and $10 million in stock.

The deal would leave Roxio with a single product: the Napster online music service, which has yet to turn its first profit.

After the deal closes in October, Roxio will change its name to Napster.

Dozens of startups have foundered in the nascent online music business, including the original Napster, which was crippled by the music industry's copyright-infringement lawsuits. Roxio launched the new Napster nine months ago and has yet to take the lead in either downloadable song sales or music subscriptions.

The company has not disclosed specific numbers of subscribers, but its latest revenue figures suggested that it had no more than 150,000, which would put it fourth in that category at best. Napster and its competitors have attracted only a small fraction of the audience drawn by file-sharing networks, where millions make free but illegal copies of hit songs.

Roxio Chief Executive Chris Gorog, who once described Napster as "synergistic" to his company's software business, offered a different view: The place to be was digital music, and the software business was effectively a distraction.

The sale to Sonic is expected to increase Santa Clara, Calif.-based Roxio's cash horde to more than $100 million, which Gorog said was more than enough to cover Napster until it started making money.