Roxio has announced that it will sell its consumer software business to Sonic Solutions for a combination of cash and stock totaling 80 million - then change its name to Napster. Around the Internet, you can read that this deal, along with existing funds will Leave Napster with about 130 million dollars to push it's digital music service.
Sonic, a DVD-creation software company, said they like the deal and it puts them in a good position with some name brand recognition and also good distribution channels. One has to wonder if part of the agrement is to continue bundling Napster with Easy Media Creator 7.
Roxio, the owner of the Napster music Web site, will receive million in cash and Sonic shares valued at million. The sale is part of Roxio's plan to focus on the digital music market. The company said it is changing its corporate name to Napster and will trade under the ticker "NAPS" on the Nasdaq after the completion of the deal. "Napster will emerge as a well-positioned pure-play in the fast-growing digital music sector with a substantially enhanced balance sheet that will support our growth plans," Roxio chairman and chief executive Chris Gorog said in a press release Monday. |
Napster executives have said that their bread and butter is their subscription service. They get a pretty good margin on this at about 40%, meanwhile the digital download business is only about 10%. Napster is way behind the pack though in relation to iTunes, which is still kicking tail. Napster has tried to gain a market share by offering it's service for free to students at universities and also marketing their own MP3 player. We have also known for some time, that Roxio was betting the bank on Napster, but this is still shocking. Sonic say they intend to keep most of the workers from Roxio, also the software will still be available, including Easy Media Creator, PhotoSuite and Toast.
This is a bold move to say the least or maybe it is an end game, what are your thoughts?
Source: CNN International
