Napster Service to Be Revived by Year-End

Software maker Roxio Inc. plans to reincarnate the Napster online music service much sooner than expected, launching a legitimate form of the once-dominant piracy hotbed by the end of the year.

Although the Napster name is virtually synonymous with online music, former users aren’t likely to recognize the version Roxio plans to announce today at a music conference in New York -- it won’t be free, won’t involve file sharing and won’t include the cornucopia of live tracks, bootlegs and musical arcana that helped make the original a hit.

Nevertheless, Roxio Chief Executive Chris Gorog, whose company bought the Napster name and technology at a bankruptcy auction last year, said he hoped to create a package of online music services that replicates the Napster experience, if not the technology.

Like the defunct file-sharing service, the new Napster is designed to let users discover artists, download individual songs, sample other users’ music libraries and even collect an unlimited number of tracks. Unlike its predecessor, though, Napster 2.0 plans to pay the labels and music publishers for their wares.

Roxio, which is based in Santa Clara, Calif., is operating Napster out of offices in New York and Los Angeles.

The resuscitation of Napster, which Gorog originally had said would occur next year, comes at a time of unprecedented activity in the Internet music market as a host of online players race to offer downloadable music for a fee.

Spurred by the success of Apple Computer Inc., whose iTunes Music Store sold 6.5 million songs to Macintosh computer users in its first 2 1/2 months, major names such as Microsoft Corp., Amazon.com Inc., Yahoo Inc., Viacom Corp.’s MTV and RealNetworks Inc. all are exploring or readying downloadable music stores.

But it’s also a time of great uncertainty and controversy. The major record labels have announced plans to sue hundreds of people who share music online, potentially triggering a backlash by music fans against the labels and the online services they support.

The music industry is betting that lawsuits will push the masses away from the file-sharing networks that have exploded in popularity since the original Napster service shut down in mid-2001. But it’s an open question whether the lawsuits will transform those users into paying customers of legitimate online services or push them to find other free sources of music.

Roxio is taking a shortcut into the online music market. It’s building the new Napster service around technology from Pressplay, a joint venture by Sony Music Entertainment and Universal Music Group that Roxio bought in May for about $44.5 million in cash and stock.

Pressplay, which lets users rent an unlimited amount of music for $10 per month and buy songs for about $1 more per track, will be revamped and wrapped into the new version of Napster. But Gorog said Napster 2.0 would include a downloadable music store with no monthly fees for Microsoft Windows users. He also said it would offer online radio stations, exclusive recordings and community functions, such as the ability to see the songs collected and playlists compiled by other users.

“Napster 2.0 has been built from the ground up to reflect the values of the original Napster brand, which is really all about independence, innovation and consumer choice,” Gorog said.

He declined to disclose how much the new service would charge or what specific restrictions would be imposed on the songs it sold, which would be in an encrypted format from Microsoft to deter piracy. But he said the restrictions would be “very liberal, very easy to understand, and most importantly, they will be common throughout” -- unlike the patchwork found on the new downloadable music store from BuyMusic.com of Aliso Viejo.

BuyMusic and Apple both are spending millions of dollars on television advertisements, upping the ante for competitors in the online music market. Gorog said Roxio has enough cash to compete aggressively on the advertising front, but he added, “We have what we believe is a monstrous advantage: We don’t in fact have to create awareness for this brand. Consumers know Napster means music. It’s very clear to them what the value proposition is.”

On the other hand, said analyst Michael McGuire of GartnerG2, a technology research firm, the public’s perception of Napster may be a major challenge for Roxio.

“They have to come up with a brand promise that makes everybody forget about Napster’s previous brand promise: free music.”