RealTime IT News

With Napster Coming, Roxio Raises $22M

Digital media upstart Roxio on Friday announced the completion of a $22 million equity financing round to be used for capital expenses. The funding comes as Roxio readies a reborn-as-legitimate Napster music download service.

The Santa Clara, Calif.-based Roxio, which surprised many with the $40 million acquisition of online music service Pressplay, did not say whether the money from the private placement would be used on the Napster relaunch, which is scheduled for later this summer.

Roxio has projected it would spend $20 million to integrate Pressplay into Napster.

"The offering expands Roxio's stockholder base and adds to the Company's working capital as it continues to expand its activities in the digital media sector," the company said in a brief statement.

Company officials could not be reached for details on the timing of Napster's relaunch, which could come as early as July month-end, when Roxio CEO delivers a keynote at the 2003 Jupiter Plug.IN conference in New York City.

The new Napster, which will piggyback on the licensing deals with the major record labels that came along with the Roxio purchase, will employ client-server technologies instead of being a peer-to-peer application.

Earlier this year, Roxio spokesperson Kathryn Kelly hinted that the new service will "probably offer both single downloads and subscription plans," which is now a staple on all the rival services.

While the new Napster is among the most eagerly awaited services in the digital music space (the brand still carries some clout on the Internet and in the media), Roxio is entering the market at a very late stage. Companies like RealNetworks , America Online and Apple have already gone to market with services.

Despite the already-crowded market, Roxio appears gung-ho about the addition of fee-based music downloads to its business, which is primarily in the sale of software for burning CDs and DVDs.

Roxio recently identified Pressplay CEO and president Mike Bebel as the man to complete the integration and kick start of Napster. Bebel will work as president and COO of the online music service, which was previously a 50-50 joint venture between Universal Music and Sony Music Entertainment.