Los Angeles (CA) - Roxio will change its name to Napster and hand its profitable CD and DVD software unit to Sonic Solutions for $80 million.
Under the terms of the deal, Sonic will purchase the entire Roxio software operation including Roxio’s CD and DVD recording, authoring, photo and video editing application products including Easy Media Creator, PhotoSuite, VideoWave, Easy DVD Copy and Toast. Roxio will receive $70 million in cash and shares of Sonic common stock valued at $10 million and also will change its ticker symbol to "NAPS" on NASDAQ.
Roxio will focus its business on the still money-loosing music distribution service Napster. The company acquired the assets of the pioneer of music file-sharing networks in November 2002 for an estimated $5 million and relaunched the service after in October of 2003, based on technology of Pressplay, a music download service Roxio purchased in May of 2003.
For the most recent fiscal quarter, Roxio’s software division recorded revenues of $22.0 million and net income of approximately $6.0 million. Revenues for Napster totaled $7.9 million and included $1.1 million from hardware sales of MP3 players to partners. Napster’s operating loss, before restructuring, amortization and stock based compensation was $8.1 million. The firm expects that Napster revenues will show strong double-digit growth and are projected to be approximately $8.0 million.
Roxio did not reveal any recent download figures of its Napster but said in February that it had sold five million songs and in June that it sold more than ten million songs. Although it considers itself as the most successful music download service for the "PC-only" platform, the firm has to go quite some way to be threat for Apple’s iTunes service which Napster considers as main competitor.
iTunes announced in July that it sold more than 100 million songs and said today that it lists more than one million songs, compared to Napster’s 700,000. iTunes believes that it holds a market share of about 70 percent of "legal downloads for singles and albums" reaching more than 2.5 million downloads a week or about twice what Napster reaches in one month.