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.

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