Roxio Buys Pressplay, Preps New Napster

Roxio announced it has taken a majority ownership in Pressplay, the music subscription service started as a joint venture of Universal Music Group and Sony Music Entertainment. Pressplay will serve as the base for a new paid version of Napster, which Roxio acquired last November, slated to debut later this year.

"With our acquisition of Pressplay, we have the most complete and scaleable legal technology infrastructure to use as a platform to re-launch Napster," said Chris Gorog, Chairman and CEO of Roxio.

Launched in 2001 alongside MusicNet, Pressplay has struggled to maintain subscribers despite boasting a library of over 300,000 songs from the five major record labels. Critics have panned the service due to stringent limitations in where users can listen to purchased music, currently encoded in Microsoft's Windows Media format.

Roxio purchased virtually all Pressplay's interests for approximately $39.5 million in a cash and stock deal. Universal and Sony will become minority shareholders in Roxio and each have the opportunity to earn $6.25 million based on profits generated by the new Napster service.

An early Pressplay partner, Roxio already offered its CD burning technology within the music service. The company plans to spend another $20 million improving and rebranding Pressplay as Napster.

"After taking the necessary time to add features, enhance functionality and improve usability we will launch a new service with an extremely compelling consumer experience that builds on the qualities of the Napster brand," said Gorog.

The new Napster is likely to take aim at Apple's iTunes Music Store, which offers song downloads for $0.99 each without a subscription fee. Apple's offering has proved immensely successful, selling over 2 million songs in just over two weeks despite its Mac-only audience.