November 27, 2002 4:30 PM PST

Roxio closes Napster asset buy

Roxio, a company best known for creating CD-burning technology, said Wednesday that it had completed its purchase of assets from bankrupt file-swapping company Napster.

Napster's technology and brand name have been on the auction block for months, after the company declared bankruptcy in June.

German media giant Bertelsmann had initially agreed to purchase the company for $9 million, but the agreement fell apart after a bankruptcy court blocked the purchase.

Roxio offers a music subscription service through Pressplay, a service owned by several major music labels. The company has made recent moves toward creating its own independent service, striking a music licensing deal with record label EMI. It's not yet clear how Roxio plans to use Napster's technology, however.

"The company will be announcing its plan for the development of Napster in the coming months," Roxio said in a statement Wednesday.

Roxio agreed to pay $5 million for Napster's patent portfolio and other intellectual property several weeks ago. Yet Roxio isn't taking on Napster's legal liabilities, including any that stem from the record companies' pending copyright lawsuit against the former file-swapping giant.

Record companies have only recently begun to give technology companies licenses to let subscribers burn their own CDs from downloaded music. This new development could help give Roxio a more solid foothold in the music distribution business, as it creates one of the most widely distributed CD software packages.

Napster's peer-to-peer software, for example, could help form a distribution mechanism for the company's own service.

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Roxio & Napster
Since Roxio went public and became Napster their
stock value went from about $42.00 a share down to around $3.00.
Guess what I think of the transaction since I own 100 shares??
Posted by Raccoon Dad (1 comment )
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