Music Download (AAPL, ROXI, RNWK, AOL, MSFT, AMZN) Message Board

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Technology Stocks : Music Download (AAPL, ROXI, RNWK, AOL, MSFT, AMZN)

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To: Mason Barge who started this subject	7/24/2003 8:35:39 AM
From: Mason Barge	of 50

Roxio bought Napster out of bankruptcy court and also bought Pressplay from Sony/Viacom for @ $40 M plus some residuals. (Shawn Fanning has been working as a consultant to Roxio, also, although how much this may mean to ROXI and how much he intends to pursue a new venture on his own are not clear.) Roxio has recently raised an additional $22 M via a stock issue, giving them about $60-$65 million in cash to relaunch Napster (really to relaunch Pressplay using the Napster name) as a pay-for-download service. There are quite a few actual and potential players in the market. My worry is that Jobs is going to end up doing for music downloading what he did for the PC -- leading the industry and then ending up with 4% of the market share. Other competitors are indeed rumor, such as Amazon.com and Wal-Mart, but Roxio will almost surely launch a competitive service in March, 2004. Its advantages will include the Napster name, a decent platform, and excellent product integration with OEM CD-burner software on most major PC lines. Apple lovers may have trouble understanding the potential difficulty of selling an product labelled "Apple" for use on a Wintel machine. Donnie Dude can 1) start using an "Apple" website to download his favorite cuts from Biting Crotch Voodoo, or 2) go to the website maintained by the outfit that sold him his CD-burning software. He is probably going to choose #2, especially when it automatically pops up with a free offer of 10 songs after he installs CD Creator 6. The theory here is that Roxio's software line, although widely used,is not terribly profitable due to margin pressures; Pressplay's not making much money; and Napster is dead. But integrating the three could create a formidable competitor in this market.

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