CD Burning Firm Buys Napster

The wretched existence of file-sharing service Napster took yet another turn Friday with CD burning firm Roxio announcing it would
shell out about $5.3 million to acquire the controversial company’s assets.

Napster, which was on the
auction block
for several months, was snapped up by Roxio in a
transaction that included all of Napster’s intellectual property and
technology patent portfolio.

The Santa Clara, Calif.-based Roxio, known for its Easy CD Creator software,
said it would not assume any of Napster’s debt burden which is still the
subject of litigation.

Roxio’s $5.3 million bid bettered one by porn provider Private Media Group
, which showed offered to pay one million shares of stock for the Napster.com domain name
and technology assets.

The Roxio purchase is still subject to the approval of the U.S. bankruptcy
court and it is still not clear how a firm known for DVD/DVD burning and
photo/video editing burning would make use of file-swapping technology.

Company officials could not be reached Friday morning to discuss the plans
but, industry watchers expect the company to integrate Napster with its
media distribution moves. Roxio already has a deal with legitimate music
service Pressplay it the Napster
assets – particularly the user base (e-mail addresses) could turn out to be
a valuable base to sell the service to online music fans.

The company’s announcement was vague on the plans: “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 and entertainment..

The drama
over Napster’s bankruptcy sale included the bankruptcy court denying
a $92 million proposed sale to Bertelsmann AG.

Bertelsmann was a major investor in Napster and had bankrolled the company
through much of its legal trouble with the Recording Industry Association of
America (RIIA).

Bertelsmann had initially inked a deal to pay $8 million for the assets but
the court ordered a re-auction after secured creditors objected to the terms
of the transaction.

Separately, online music subscription service MusicNet announced a deal with Universal
Music Group and Sony Music to offer downloadable digital files from all five
major record labels.

The Seattle-based MusicNet, which is backed by AOL-Time Warner and RealNetworks is the last of the legitimate
paid download services to ink licensing deals with the major record labels.
These deals are seen as clearing the final hurdle in the quest to roll out
music download services that can adequately compete for the wallets of music
fans willing to pay to listen or download music from the Internet.

Last month, rival Pressplay snagged a
licensing deal
with BMG and is locked in discussions with Warner Music
Group to round out its music providers.

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