Roxio yesterday announced its acquisition of Universal Music/Sony's joint online music download service, Pressplay, preparing the ground for a battle of online brands in the developing digital-music business.
Both Sony and Universal have taken seats on Roxio's board as a result of the deal, which cost an estimated $39.5 million in cash and Roxio stock. The deal follows the latter company's purchase of the remaining assets of Napster late last year.
Pressplay was formed by Vivendi Universal and Sony Music Entertainment at the same time Bertelsmann, AOL Time Warner, EMI and RealNetworks backed rival service MusicNet.
With Pressplay and Napster assets now under Roxio's belt, the company said in a statement that it intends to resurrect: "the most powerful brand in the online music space."
Napster goes legit The acquisition gives Roxio the right to carry music from all five major labels. the move also means an upgraded version of the currently non-Mac-friendly Pressplay software shall become the engine of the service, which will be launched under the Napster brand.
Raymond James vice president Phil Leigh, a media analyst, told Macworld UK: "Roxio wants to enhance the user interface, scale up the platform for a much larger base of potential users, and simplify the digital rights management so as to provide a more convenient and pleasant consumer experience. This will take time and money, so the new Napster service will probably not be officially launched until the first quarter of next year."
Leigh estimates that if just 1.5 per cent (one million) of former Napster users were to switch to a fee-based Napster-branded service, Roxio would double its current revenues, if each user spent $10 per month.
"We believe that a legitimate version of Napster can be quite successful. However, it will be necessary that it be more consumer friendly than the present version of Pressplay," said Leigh.
Roxio CEO Chris Gorog promised to deliver ease of use: "The new Napster will be unrecognizable from the current Pressplay. We'll have ease of use and more features and it will be a friendly, easier application."
Battle of the brands The transition to digital distribution in the music industry has begun and is "as certain as fleas on a yard dog," said Leigh. The analyst believes that as this transition occurs, established online brand names will lead the pack - Napster for its clear identification with online music. Apple is clearly recognized beyond the computer industry for design, ease of use and innovation.
Gorog told CBS Marketwatch that Roxio does not presently see Apple's service as competition, due to the size of Apple's installed user base. When Apple launches a Windows service: "We have a monster competitive advantage with the biggest brand in the online music business, and it's recognized as a music brand and not a computer brand."
Before joining Roxio in 2000, Gorog was president of new business development at Universal Studios from 1995 to 1999.