Napster Returns

New legal version aims to compete with iTunes.

BY WARREN COHEN

June 26, 2003

Apple’s widely hailed ninety-nine-cent music store will soon confront a surprise competitor: Napster. Sued out of existence by the recording industry, the company was bought in bankruptcy court last year by Roxio, a company known for its CD-burning software. Napster founder Shawn Fanning is now employed a consultant. By next year, Roxio plans to relaunch a label-sanctioned Napster to work on Windows PCs, which represent ninety-six percent of the computer market, compared with nearly four percent for Apple.

The new Napster will be powered by the guts of the subscription service Pressplay, a joint venture between record labels Universal and Sony, acquired by Roxio on May 19th for $39.5 million. While all the labels haven’t yet signed off on any Windows service that mimics Apple’s CD burning and downloading rights, Roxio is optimistic. “We’ve very comfortable with the licensing we have from labels,” says Roxio CEO Chris Gorog, “and we will work with the record companies to get further liberalization.”

Napster won’t be the only music store fighting for Windows users by the end of 2003. AOL Music already sells retail CDs and a subscription service, and it's planning to add digital downloads by year’s end. Musicmatch, which has 140,000 customers who pay between $2.95 to $5.95 a month for customizable radio stations, hopes to add a la carte singles as well. And of course Apple has already promised a Windows version but has to cut new deals with the labels as well as concoct a new storefront for the shaky Windows platform. “Today with iTunes, you click the 'buy' button and the music goes into your music library, not some random place on the hard drive,” says Peter Lowe, a director of marketing at Apple. “All the pieces don’t work so closely in Windows, so it’s going to take a lot of work.”