Roxio announced its fourth-quarter results last night, but the company kept plans for an online music-distribution service close to its chest.
The company reported higher earnings (a net profit of $2.3 million) for the quarter, but warned investors of a weak quarter to come because it expects sales of some of its CD-copying products to decline.
For many, it is Roxio's online music download service plans that appear most interesting. Roxio announced its acquisition of the Universal/Sony joint venture subscription-based PressPlay service Monday.
That deal cost $30 million in cash and stock; and put executives from both Sony and Universal on the Roxio board. The service will be relaunched under the Napster brand, which Roxio also owns.
Sound of success Apple's iTunes Music Store has furnished proof positive to the music business that consumers want flexibility in the use of the music they buy.
Responding, Roxio last night hinted it sought to offer similar flexibility to its customers. However, company CEO Chris Gorog said the company hasn't yet decided whether to adopt a pay-per-song or subscription-based service.
Gorog said the company would make "significant enhancements" to the Pressplay service, such as building a solution for easy CD burning and transporting tracks for use on MP3 players. In this respect, Roxio's vision shares much with Apple. Apple lets users create and rip CDs from within iTunes, and allows users to place tracks on many MP3 players, including its market-leading iPod.
Gorog revealed that Roxio has secured the support of the major music labels to furnish similar customer-friendly features in its service.
The company declined to reveal more details about its service, beyond its plans to launch in the next 12 months at a cost of $20 million. It warned it would lose money on the project until the service is widely adopted.
"Roxio expects to emerge as a very powerful competitor in the online music business," said Gorog.
Some industry observers accept the company may have a good opportunity, given the strength of the Napster brand, but warn caution: "They are giving the impression they're chasing a big opportunity, but they face a lot of competition in that area," Riley and Co. analyst Justin Cable told Reuters.
Competition already exists in the market. Some high-profile examples in the space now include: Real Networks, which is preparing to revise its recently-acquired Rhapsody service; Apple, itself preparing an international extension of and Windows version release of its service; and Mac-friendly subscription service Emusic - part of the Vivendi Universal group - continues to revise and improve its own service.
In the UK, OD2 already has agreements with the majors to distribute their tracks. Macworld asked that company's director of sales and marketing Edward Averdieck if it had experienced an increase in trade following Apple's launch. He said: "We have definitely seen activity hot up over the last few weeks."