INDUSTRY REPORT

Whether Roxio or Napster, It’s Just a Shadow

Troubled Roxio, owner of the equally troubled Napster 2, is deceased. Or, rather, it’s dropping the Roxio part and is taking a second shot at using the Napster name to revive its failing fortunes.

The firm has been tottering along for months, issuing statements based more on hope than reality and clearly looking to Napster 2 — which, truth be known, isn’t in terrific shape — for its salvation.

And now it’s taken things a faltering step further.

To raise more badly needed cash, Roxio sold its consumer software division to Sonic Solutions for $80 million — $70 million in cash and shares of Sonic common stock valued at $10 million.

Henceforth, Roxio will be known as Napster.

Corporate Online Music

Napster has been able to penetrate a frightening number of U.S. universities, thanks largely to partisan backing from the Big Four record label cartel. But in spite of this, and faithful support from the mainstream media, it’s never been able to become a significant player in the corporate online music market, such as it is.

While Big Music tries in vain to peddle its cookie-cutter tunes through the various corporate music “stores” it supplies with identical product, music lovers in their hundreds of millions are ignoring its offerings, preferring the P2P networks.

However, you have to give Roxio (oops, Napster) an “A” for effort. It isn’t giving up, and with another $70 million now available, still hopes to get into the online game.

“Under the terms of the deal, Sonic will purchase essentially 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 (oops, Napster) says in a statement.

Captive Users

“Sonic expects to retain most of the current employees of the Roxio organization. Sonic intends to continue the Roxio brands, and current distribution and OEM relationships,” the company says.

Roxio (oops, Napster) hasn’t been able to weasel its way into the corporate online music market, but it does remarkably well with captive users and, this time, somehow, it’s managed to suborn America’s Army, Navy, Air Force, Marines and Coast Guard.

Mind you, it’s about the only way Napster can get users. Students and military personnel have no choice but to swallow whatever the powers that be dish out — whether they like it or not.

When will the RIAA and MPAA announce the formation of a Joint Committee of the American Armed Forces and Content Communities along the lines of Hollywood’s Joint Committee of Higher Education and Content Communities, one wonders? Then we’d have something along the lines of joint-chairs, Cary Sherman, RIAA, Jack Valenti and Dan Glickman, MPAA, general Richard B. Myers, chairman, JCS.

‘Legal Music’

Anyway, through the Army and Air Force Exchange Service (AAFES), Napster’s “huge catalog of legal music — over 750,000 tracks — and community features” have become “available” to active, reserve and retired military personnel and their families “in all branches of the United States military.”

Absolutely unbelievable.

And 750,000 tracks, huh?

Last month alone, there were some 8.25 million simultaneous P2P users online at any given moment, while shared files for July were close to 1.25 BILLION, Big Champagne CEO Eric Garland says.

That’s the true bottom line.

Napster died when the then Big Five record labels drove a steak through its heart and nothing Roxio-that-was can do will change that.


Jon Newton, a TechNewsWorld columnist, founded and runs p2pnet.net, a daily peer-to-peer and digital media news site focused on issues surrounding file-sharing, the entertainment industry and distributed computing. p2pnet is based in Canada where sharing music online is legal.


2 Comments

  • I think we are in the middle of a transition period between licencing that worked in the old discrete-component days (such as CDs and vinyl with broadcast-radio-taping a poor second) and the modern situation where digitally transmitted audio can be selectively downloaded anywhere in the world in minutes, or streamed live on demand.
    What this new licencing is going to have to look like is anyone’s guess. DRM isn’t going to work unless copyright violations are made a direct crime (currently they aren’t – "piracy" is selling or otherwise making money from copyright violations, and is a crime, actual copying is a civil issue)
    What licencing models can you imagine? well, for artists the big picture has always been the concerts – some are lucky to break even on CD sales, even after the massive markup and in a protected market; the record companies spend huge chunks of the income (promotion, outright bribes, or simply upfront costs), and when the math is done at the end of the day, quite often that comes out of the artist’s percentage of the sales, not the companies (even if there is a 50/50 or better arrangement, the artist isn’t getting 50% of the purchase price, and quite a lot of the charges are levied by other parts of the same company – studio time, for instance)
    What model will give the artist more compensation for his own hard work? Digital tip jars have been suggested, but to be honest aren’t going to work – a diehard fan will be happy to throw a digital dime or two, but the majority of users are now *used* to freeloading on the p2p networks, and opposed to actually paying for what they can get for free already. I don’t have any answers – but I at least realise that the questions currently being asked aren’t the right ones.

  • It’s a nonsense to compare p2p users – not paying – with actual customers. Plus in a legal & paying services, people are not only buying a service but also a brand.
    Napster’s choice to focus exclusively on digital music is totally coherent. If you think about it Napster has always been a digital music company and brand…and speaking of brand, it shouldn’t be forgotten that Napster has a key advantage in this area. Although Napster is a young brand it already has very strong values that no other brands have. Napster broke the rules and became a "David" in a "Goliath" world. It has contributed to make the brand so popular and genuine -compared to the tech or traditional retailer brands that want to be part of this market. Today Napster is coming back wrapped in a legal shell. When you have a look at some articles in newspapers, Napster may even be considered as a player coming back to "save" the record industry from piracy. In the same time the company is always reffered as the first pirate brand. Which in people minds means "cool" brand. Today, by turning legal, Napster (the company) gives everybody the opportunity to be part of this piracy experience…legally. It gives the right to do what’s not allowed. At a brand level, there will always be a taste of "taboo" in the Napster brand which makes the consumer experience unique. And after a certan period, if all digital music companies provide the same kind of service – which should definitely be happening as reaching a mature market life cycle – the winner will be the one who will be able to also provide a cool buying experience. Napster brand has all the ingredients to become a Key player in the coming years. Consumers buy services AND brands. Because of these cool, complexe and opposite values, Napster could make in the digital world what MTV built up in the TV area.

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