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Roxio to Bundle Napster with CD-Burning Tools

NEW YORK -- Digital media software firm Roxio plans to bundle the reborn Napster 2.0 service with its popular CD/DVD burning tools and roll out what it calls the first online music play offering unlimited a la carte downloads alongside a subscription option.

Roxio chief executive Chris Gorog used the spotlight of the Jupiter Plug.IN Conference & Expo here to release details of Napster 2.0, which is expected to go live in time for the Christmas holiday with about 500,000 tracks for sale via individual downloads, by monthly subscription, via Internet radio, or in any combination

He declined to provide details on pricing or subscription rules terms. On the subscription side, Gorog said downloads would be tethered within the PC environment. Over the next year, he said Napster would embrace complete portability, including the ability to transfer tracks from the PC to the car and to the entertainment center in the living room.

"We're working with hardware and technology partners to ensure a seamless, integrated platform to make the music available everywhere. Within 12 months, Napster 2.0 will deliver on that vision," he said.

Gorog said the Santa Clara, Calif.-based Roxio, which surprised many players in the sector with its $40 million acquisition of Pressplay, plans to pre-install Napster 2.0 in all future releases of its CD/DVD burning software suite. The company, which also hawks software for photo and video editing, said its current installed base was in excess of 100 million users.

The plan to roll out a subscription model alongside a la carte sales is in direct contrast to Apple's rejection of fee-based subscription sales. Like Apple's iTunes, the new BuyMusic online store also uses the a la carte model exclusively.

While Gorog remained mum on a pricing structure, industry watchers expect Napster 2.0 to sell songs for between 79 cents and 99 cents. Full-length album downloads, which will also be available, are expected to cost between $7.99 and $9.99. It's also expected to roll out tiered subscription options that will include pre-programmed Internet radio stations.

Napster 2.0 will use technology from Microsoft to take care of Digital Rights Management (DRM) and will be exclusive to PC users. A Mac version is being planned for release sometime in 2004.

One source said Roxio will also market Napster 2.0 heavily through the distribution agreement with Yahoo that came with the Pressplay acquisition. There are also plans in place for a major ad push to take advantage of the well-known Napster brand. The "kitty" logo, once the most hated image for the music industry, will be retained.

Gorog said independent research showed that 47 percent of online music fans would pay for the new Napster and insisted a hybrid model was the best option to pursue.

The legitimate reincarnation of Napster joins an increasingly crowded marketplace for digital downloads. In addition to iTunes, BuyMusic, MusicNet, Rhapsody and FullAudio's MusicNow, sources say RealNetworks and Listen.com are putting the finishing touches on a new music store to embrace the a la carte model and running on the company's Helix platform. The Real/Listen.com music store will be rolled out alongside the Rhapsody music service, which is subscription-based.

At a recent meeting with analysts, Microsoft boss Bill Gates also hinted at a music service running within the Windows Media Player software.

Meanwhile, Jupiter Research has cut its previous outlook for the online music sector, estimating the market to reach $3.3 billion in 2008. Despite slower-than-expected growth, the research firm said the sector will grow from less than $1 billion this year. By 2008, the Internet will account for 26 percent of U.S. music spending.

"The industry is suffering from competition for entertainment dollars, changing demographics, the end of the CD upgrade cycle and piracy," Jupiter Research analyst Lee Black said, noting that the threat of litigation has not yet scared off online adults from file-sharing activities.

* Editor's Note: Jupiter Research and internetnews.com are owned by Jupitermedia Corp.