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Commentary: Roxio, Napster, and Why the Music Industry Just Doesn’t Get It
Posted Feb 1, 2003 Print Version     Page 1of 2 next »

Roxio's recent $5 million purchase of the remnants of Napster caused more than a few music and technology pundits to scratch their heads. The marriage of peer-to-peer filesharing, music downloading, and CD burning might have seemed a match made in heaven back in 2000, but now you can't help wondering— what's the point? After all, Napster's been out of commission for more than a year, and its physical assets recently hit the auction block (literally; computer parts, laptops, and Napster-logo items went up for sale in San Francisco in December). Music enthusiasts have moved on to other peer-to-peer networks like KaZaA to acquire their ill-gotten booty. Just what does Roxio get out of the deal?

For the record, at least, Roxio's not talking, beyond a prepared statement it issued when it first announced the transaction, which was approved in November by the California bankruptcy court overseeing Napster's status. "We feel that Napster has value that is synergistic with Roxio's current digital media offerings and long-term vision for the future of digital media entertainment," the statement reads, adding that Roxio acquired all of Napster's assets—including several technology patents—and none of its liabilities, including defending the once-dominant filesharing service from litigation against the record labels. "Following the close of the transaction, we will provide consumers and investors a strategic vision of how Napster will expand Roxio's role in the digital media landscape and enhance our offerings to consumers." Not exactly enlightening, but then again, it's not exactly surprising that Roxio is keeping mum about its plans, since Bertelsmann—parent company of record company BMG—was evidently unable to forge a new pay-for-play service after it cut a deal with Napster in 2000.

So now the future of Napster lies in the hands of Roxio, which took its first step toward a still-undefined downloading/burning service when it entered into a partnership with EMI Recorded Music in 2001. At the time, Roxio and EMI promised to "commercialize consumer CD recording" by allowing users to burn licensed EMI recordings with its Easy CD Creator software. Roxio now provides the CD burning technology for Pressplay—a service that offers streaming and limited copying of songs from the Sony, Universal, and EMI catalogs in a proprietary format—and MusicNet, which offers the same services with the Universal, BMG, and AOL/Time Warner Music Group catalogs. But that's still a far cry from the "heavenly jukebox" idea that appealed to Napster's users, which numbered 26 million at the service's peak popularity in early 2000, before the record label lawsuits forced it to shut down in June of that year. And while Pressplay and MusicNet, as well as similar services like Rhapsody and Liquid Audio, are picking up steam, none of them offers the sort of song selection that Napster did. In the meantime, other peer-to-peer networks like KaZaA and LimeWire have stepped into the void, and users accustomed to free, unfettered downloading and burning have migrated to those services rather than to the subscription models. According to one study, KaZaA boasts about 3.5 million users at any given time, while the pay-to-play services have managed to muster only about 500,000 combined users.

"Free music for download is still so prevalent that the migration to paid services will be a very slow one," says Jupiter Research analyst Lee Black. "Even though the free services are full of headaches, like unpredictable file integrity and download speeds, users tolerate those problems because it's free. There's some merit in the argument that the Napster name is worth something, but that name was associated with something free."

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