Napster Turns Legit

By Anita Hamilton

We've been waiting for years for a guilt-free Napster, the pioneering music-sharing service that shut down in 2001 after losing a legal battle over its role in distributing copyrighted songs.

Now it's back. Software maker Roxio, which bought the Napster name and assets for $5.3 million last November, will launch by the end of the year a new Napster service that offers consumers a monthly subscription plan or a pay-per-song download fee--a combination that's an industry first. The company even signed Napster creator Shawn Fanning as a consultant. While pricing has not been announced, "Napster will be much more comprehensive than anything else that is out there," promises Roxio CEO Chris Gorog.

It needs to be. The brilliance of Napster 1.0 lay in its simplicity and comprehensive catalog of songs. No pay service has been able to sufficiently untangle the copyright mess to allow for a broad range of downloadable music. Apple's iTunes Music Store made a breakthrough in April by letting users download individual songs for 99-c- a pop (as opposed to requiring a monthly subscription plan). RealNetworks' Rhapsody music service scored last week when it added some 500 Rolling Stones tracks to its 350,000-song catalog. Napster 2.0 promises 500,000 songs at launch--but that's still less selection than your average music store.

Companies from Amazon to Microsoft are mulling plans to enter the business. The reason: Jupiter Research estimates that revenue from online music will zoom from $80 million this year to $1.5 billion in 2008. That's just a sliver of today's $12 billion CD market, but it's a real business.

Can Napster hit it big? Certainly the name will help. "Napster is a well-recognized entity," says Jupiter analyst Lee Black. The key will be the finished product. If it can come close to the original, Napster 2.0 will have been worth the wait. --By Anita Hamilton

You can send e-mail to Anita at [email protected]