Company changing name to Napster
HOLLYWOOD — Digital media company Roxio is going all Napster.
Company on Monday signed a definitive agreement to sell its consumer software division, which produces media applications for computers, to competitor Sonic Solutions for $70 million in cash and $10 million in stock.
Roxio now will focus exclusively and use its new cash hoard for its digital music business, which took the name of the once infamous peer-to-peer application Napster. Company is changing its name to Napster as well.
Since its launch in October, Napster 2.0 has grown steadily but still lags far behind online music leader iTunes. Execs are hoping new subscription options that take advantage of upcoming technology from Microsoft will help Napster stand out as an alternative to iTunes’ 99¢-per-song service.
In the second quarter, the first on Roxio’s fiscal calendar, Napster generated $6.8 million in music sales and $1.1 million in hardware sales for digital music players, up 11% from the previous quarter.
Company is projecting $8 million in music sales in the current quarter.
Deal was announced after the market close Monday. Roxio stock closed down 15¢, or 3.6%, Tuesday at $3.99.