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Roxio Scoops Up Napster's Remains

CD software utility vendor sees value in file-sharing service's technology.

Scarlet Pruitt, IDG News Service

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Napster's final resting place will apparently be with digital media software provider Roxio, which has agreed to acquire the remaining assets of the fallen peer-to-peer file-trading company for $5 million in cash and 100,000 warrants to purchase Roxio common stock.

Roxio said Friday that it will acquire all of Napster's intellectual property and technology patent portfolio. Roxio's CD Creator software is one of the leading music file management and CD-burning tools, and is bundled with many CD drives.

It's the latest chapter in a short life and prolonged death for Napster, the innovative online service that drew many foes as well as fans. Its court battle also became the landmark for copyright protection on the Internet.

Selective Purchase

Napster filed for bankruptcy earlier this year after getting knocked offline in a prolonged battle with the music industry over claims that its P-to-P network facilitated copyright infringement.

Roxio said it will not be responsible for the bankrupt company's liabilities, however, which include pending litigation.

"Roxio's acquisition of Napster will expand our role in the digital media landscape and enhance our offerings to customers," said Chris Gorog, Roxio president and chief executive officer, in a statement.

The company also did not offer any specifics on how it plans to use Napster's assets, saying that it will provide more details following the close of the transaction. Roxio added that it expects the deal to close with approval from the bankruptcy court on November 27, 2002.

Property of Interest

Other bidders have vied for Napster's remains since the company collapsed. A bankruptcy court judge in September blocked Napster's sale to German music giant Bertelsmann.

Bertelsmann seemed the most natural candidate to acquire Napster's assets, given that the media conglomerate had already sunk millions into the start-up. However, other music labels and record companies objected to the sale.

Roxio said that its decision to scoop up the remaining Napster assets was based on the companies' synergy in the digital media and entertainment markets.

"We feel that Napster has value," Roxio said in a statement.

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