Roxio to Sell Software Division and Change Name to Napster

Roxio is to get out of the software industry and concentrate solely on digital music – even to the extent of ditching its name and becoming Napster. Online music services are so popular, and the Napster brand still so well known, that it makes sense to to them get out of the software business completely by selling their software business to Sonic Solutions for US$80 million (€65 million).

Napster is making Roxio just under US$8 million a quarter, and will bring in between US$30 million (€24.5 million) and US$40 million (€32.5 million) in the financial year. More than half of Roxio’s income comes from Napster subscriptions, and Napster-branded MP3 players brought in US$1.1 million (€900,000). Napster subscriptions are a good revenue stream for the company – margins on downloaded songs are only 10%, but are as high as 40% on subs.

Roxio can see that there is limited life in the CD burning software market, especially now that operating systems like Windows XP have disk burning facilities built into them, and are getting more sophisticated all the time. Whilst there will be a market for specialist software for recording CDs for some time, many consumers’ needs are already satisfied by the disk burning capabilities already integrated into iTunes or their OS, leading to reduced demand for their products.

Napster CEO Chris Gorog said during a conference call announcing the sale: “With the news today, we are on a path to become a very well-funded pure play in one of the hottest sectors in the consumer technology market.”

Roxio will be testing Microsoft’s Janus DRM technology this year, allowing subscribers to move their content to portable players for the first time.

Sonic are quite pleased with their new acquisition – Roxio has a well-established consumer brand with high-profile distribution channels. Try buying a CD writer that doesn’t come with a Roxio product.



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Fraser Lovatt

Fraser Lovatt has spent the last fifteen years working in publishing, TV and the Internet in various capacities, and believes that they will be seperate platforms for at least a while yet. His main interests at the moment are exploring where Linux is taking home entertainment and how technology is conferring technical skills on more and more people. Fraser Lovatt was born in the same year that 2001: A Space Odyssey was delighting and confusing people in the cinemas, and developed a lifelong love of technology as soon as he realised that things could be taken apart, sometimes put back together again, but mostly left in bits or made into something the original designer hadn't quite planned upon. At school he was definitely in the ZX Spectrum/Magpie/BMX camp, rather than the BBC Micro/Blue Peter/well-behaved group. This is all deeply ironic as he later went on to spend nine years working at the BBC. After a few years of working as a bookseller in Scotland, ("Back when it was actually a skilled profession" he'll tell anyone still listening), he moved to England for reasons he can't quite explain adequately to himself. After a couple of publishing jobs punctuated by sporadic bursts of travelling and photography came the aforementioned nine years at the BBC where he specialised in internet technologies and video. These days his primary interests are Java, Linux, videogames and pies - and if they're not candidates for convergence, then what is?