Roxio has provided an update on its business outlook for the quarter ending December 31, 2003.

Roxio announced that its digital media software business is "performing ahead of the company's expectations" stating that this is "due to the strong performance of category leading products, Easy CD & DVD Creator 6 for Windows, and Toast for the Mac platform".

The company has raised its current quarter outlook for software sales, increasing guidance to $14.5 million from $14 million. And, according to Roxio's Chairman and CEO Chris Gorog, the release of Creator 7 in the quarter of 2004 will cause "a very substantial increase in software revenues".

Roxio states that the $35 billion dollar music industry is "just beginning its transformation from physical to online distribution". The company also says that Napster has "quickly established itself as one of the top two players in this sector".

Gorag predicts that: "Given this current uptake rate by consumers, we now expect revenue for our online music business to be approximately $3.5 million for the December quarter. This represents a quarterly run-rate of approximately $5 million, given that Napster 2.0 launched at the end of October."

Gorog confirms that Napster-related marketing spend is expected to "decrease substantially going forward as we move away from our launch quarter and into steady-state marketing activities".

He also confirms that Napster schemes such as prepaid retail cards and the Napster BurnPak "should positively impact Napster's financial results starting in early 2004."

Roxio shares rose 14 per cent on the Nasdaq following the announcement.