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Last Updated: Monday, 19 May, 2003, 22:10 GMT 23:10 UK
Roxio continues online consolidation
web grab
Roxio, the firm that makes CD-burning software, has acquired the struggling online music firm Pressplay.

Roxio said it planned to relaunch Pressplay under the Napster brand which it acquired at a bankruptcy auction last year.

Roxio bought the rights to Napster's brand and assets for $5.3m (3.2m) last November, while Napster was in Chapter 11 bankruptcy.

It is now paying about $39.5m for Pressplay, the joint venture between Universal Music Group and Sony Music Entertainment which has music deals with the five big music labels.

'Burning cash'

Analysts said the deal suggested more consolidation ahead in the online music business, where commercial services have struggled to survive.

We have the most complete and scaleable legal technology infrastructure to use as a platform to re-launch Napster
Chris Gorog, Roxio chairman and CEO

"The market's going through consolidation because these services have been around for a couple of years, burning cash and not generating much revenues from subscribers or advertising," said PJ McNealy, an analyst with GartnerG2.

Another subscription service, Listen.com, was recently sold to RealNetworks while the independent service FullAudio denied rumours this week that it was looking for a buyer.

A successful exception has been the online music service launched by Apple Computers earlier this year - a pay-per-download model which alters from rivals by not asking for a monthly subscription.

Losing cash

Roxio chairman Chris Gorog said the company would consider both pay-per-download and subscription services for the new Napster-branded service.

"With our acquisition of Napster we obtained the most powerful brand in the online music space.

"Now with our acquisition of Pressplay we have the most complete and scaleable legal technology infrastructure to use as a platform to re-launch Napster."

Pressplay has catalogue deals with BMG, EMI, Sony Music Entertainment, Universal Music Group and Warner Music Group, as well as a number of independent music companies.

Roxio said it would spend about $20m to relaunch the Napster brand but warned it would lose money "until the service is widely adopted".

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