Is Roxio Ready to Relaunch Napster?

Roxio snapped up online music subscription service Pressplay for cash and stock estimated at $39.5 million on Monday, in a step aimed at launching a new online service under the Napster brand.

The deal follows Roxio's purchase of the remaining assets of fallen Net music pioneer Napster late last year.

Napster was ordered offline in 2001 amid copyright infringement complaints by the big record labels. The labels have since set about promoting their own online music services, albeit with little success.

Pressplay was formed by Vivendi Universal and Sony Music Entertainment at about the same time that Bertelsmann, AOL Time Warner, EMI Group, and RealNetworks backed rival service MusicNet.

Building a Brand

With Pressplay and Napster assets now under Roxio's belt, the company said in a statement that it intends to resurrect "the most powerful brand in the online music space."

The digital software provider's purchase of Pressplay gives it catalog rights to all five major labels, as well as a digital music distribution infrastructure.

Under terms of the deal, Roxio purchased majority ownership in Pressplay for $12.5 million in cash and 3.9 million shares of Roxio common stock, based on Friday's closing price. Additionally, the contract states that Sony Music Entertainment and Universal Music Group each have the right to earn $6.25 million based on positive cash flows from the new Napster service, Roxio said.

The new Napster is set to go up against the ITunes online music store launched by Apple Computer last month, which has so far reported strong demand.

Shares of Santa Clara, California-based Roxio (ROXI) traded up 10.72 percent at $7.64 Monday.