Napster Reloaded	SIGPC Vol. 7, No. 5 May 23, 2003

by Scott Tilley

Like a digital phoenix rising from the ashes of the dot.com meltdown, Napster is returning. The Napster name is currently owned by Roxio. Earlier this week they purchased the music service pressplay from Sony-Universal. The intent seems clear enough: reload Napster with legitimate music content and relaunch it as an online music store. It would put Roxio and Napster on a collision course with the recently released Apple online music store. After its long hiatus, does the Napster brand name still have enough clout to compete?

Roxio (a spin-off from Adaptec) is best known for its CD/DVD burning software “Easy CD & DVD Creator” (Windows) and “Toast” (Mac). Last November, Roxio bought the remains of Napster at fire sale prices. By doing so, Roxio gained access to one of the most recognized names on the Web. At its peak, Napster was the most popular Web site on the planet for swapping digital music. It finally succumbed to repeated lawsuits from the recording industry and effectively closed down by July 2001.

Earlier this week, Roxio purchased the online music service pressplay from Sony-Universal for $40 million. Pressplay is one of several fee-based music services that have struggled to become financially viable. One of the reasons cited for pressplay’s lack of success is the restrictive licensing model it adopted, forcing users to effectively rent music on a monthly basis and listen to streaming versions of songs they purchased. Limited and expensive downloading and CD burning options further hampered pressplay and its competitors such as Listen.com’s Rhapsody (now part of RealNetworks) and MusicNet. The recent launch of Apple’s online music store, with its more relaxed model of fair use for the consumer, seems to have changed the situation. (SIGPC will cover the new Apple online music store in a future article.)

Whether or not Napster reloaded will succeed is unclear. The Napster brand name is still well known, but in the two years that it has been offline there have been many changes in the online music landscape. Decentralized P2P systems such as Kazaa have replaced the Napster model of a centralized index – making it far more difficult for legal challenges to shut down the service. Moreover, the continuing growth of broadband connections has made it possible to extend P2P services to offer files of any type (e.g., DVD-quality video), and not just MP3 music.

Most people still associate Napster with free music. Roxio says it will spend nearly $20 million to relaunch Roxio has a commercial enterprise. But will people be willing to pay? That very likely will depend on the business model Roxio adopts, which in turn will depend on the type of deals they can negotiate with the record labels. If Roxio continues the pressplay subscription-based model, with all its copy restrictions for purchased music, it seems doubtful that they will make much headway.

Apple seems to have been successful, but their service is barely a month old. And they have Steve Jobs to lobby his Hollywood peers on Apple’s behalf. Roxio is still fundamentally a software company, and they may find that running an online media service to be quite different. However, Roxio has hired Napster’s original founder, Shawn Fanning, as a consultant. Time will tell if his 15 minutes of fame has passed or not.