Roxio buys Pressplay for Napster relaunch
- — 20 May, 2003 08:03
Roxio Inc. snapped up online music subscription service Pressplay for cash and stock estimated at US$39.5 million on Monday, in a step aimed at launching a new online service under the Napster brand.
The deal follows Roxio's purchase of the remaining assets of fallen Net music pioneer Napster Inc. late last year.
Napster was ordered offline in 2001 amid copyright infringement complaints by the big record labels. The labels have since set about promoting their own online music services, albeit with little success.
Pressplay was formed by Vivendi Universal SA and Sony Music Entertainment Inc. at about the same time that Bertelsmann AG, AOL Time Warner Inc., EMI Group PLC and RealNetworks Inc. backed rival service MusicNet.
With Pressplay and Napster assets now under Roxio's belt, the company said in a statement that it intends to resurrect "the most powerful brand in the online music space."
The digital software provider's buy of Pressplay gives it catalog rights to all five major labels as well as a digital music distribution infrastructure.
Under terms of the deal, Roxio purchased majority ownership in Pressplay for US$12.5 million in cash and 3.9 million shares of Roxio common stock, based on Friday's closing price. Additionally, the contract states that Sony Music Entertainment and Universal Music Group each have the right to earn US$6.25 million based on positive cash flows from the new Napster service, Roxio said.
The new Napster is set to go up against the iTunes online music store launched by Apple Computer Inc. last month, which has so far reported strong demand.
