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By Margaret Kane Staff Writer, CNET November 15, 2002, 6:01 AM PT

Roxio, which makes CD-burning software, is acquiring virtually all the assets of Napster, the former file-swapping company, for about $5 million in cash and stock.

The deal, expected to close later this month, is subject to the approval of the bankruptcy court handling Napster’s case.

Roxio said it will receive all of Napster’s intellectual property, including its technology patent portfolio, but will not assume any of Napster’s liabilities, including pending litigation.

The company said it will offer details about how it will use Napster’s technology to “expand Roxio’s role in the digital media landscape” after the deal closes.

Roxio has been making inroads into online music. It recently signed a distribution deal with EMI Group, allowing it to let customers make permanent downloads of songs, transfer songs to portable devices such as MP3 players and burn CDs with songs downloaded from the services.

Napster in some ways revolutionized the way many people get music. But while its technology was wildly popular, it never came up with a profitable business model. Besieged by lawsuits from the music industry, the company filed for bankruptcy in June. German media conglomerate Bertelsmann had tried to buy the company, but that deal was blocked by a federal judge. Napster’s assets subsequently drew many interested buyers, including a porn company.

Roxio will pay $5 million in cash and 100,000 warrants in Roxio stock for the assets. Roxio closed Thursday at $3.38 on Nasdaq.