Napster set to replay Thursday, for pay

Roxio, the company that bought the remnants of fallen song-swapping service Napster, is preparing to relaunch the service, dubbed Napster 2.0, on Thursday.

Saying that it is “letting the cat out of the bag,” Roxio plans to unveil the kitty icon-clad service at a launch event in New York. Napster’s resurrection comes over two years after the service was knocked offline amid accusations of copyright infringement from the major record labels.

Mark Mulligan, senior analyst with Jupiter Research in London, said that Napster’s “hip” image will be an advantage in the market.

“Napster has the James Dean effect – it died young, it died beautiful, and people remember it fondly,” Mulligan said.

But unlike the free file-swapping format the service had in the past, the new Napster will be a paid service with deals from all five major labels and a handful of independents firmly in place, according to Roxio.

Napster 2.0 will initially offer access to over 500,000 tracks through individual download, monthly subscription and Internet radio, Roxio said last July while previewing the new service.

In fact, the new Napster will be much like existing label-backed services such as MusicNet, according to Mulligan. Because of the limits of the record licensing deals, Napster 2.0 will focus on music streaming and burning will come at a premium, Mulligan said.

“It will be a welcome addition to the marketplace but will be nowhere near what Napster used to be,” Mulligan said.

For a nearly unlimited music selection, users will still be tempted to go to free music-trading programs like Sharman Networks Ltd.’s Kazaa, Mulligan said. He added that Kazaa is currently a bigger brand name than Napster but it has been hurt by the amount of spyware lurking on its service.

Roxio, in Santa Clara, has been preparing for the relaunch of Napster since it said it was scooping up Napster’s intellectual property and technology patents for around $5 million late last year.

The company bought online music subscription service Pressplay for $39.5 million in May, saying that it would use the service’s technology as the platform to relaunch Napster as a legitimate service.

Roxio, which sells digital media software, is banking on Napster’s brand name and image to make a splash in the online music service market.

Although Roxio’s position as a CD-burning software provider may give consumers the hope of more portability and download capabilities, Mulligan said that, again, it will be limited by the licensing deals.

“This is not a PC version of the iTunes online music store,” Mulligan said, referring to Apple’s popular service.

Napster 2.0 is being introduced in the U.S. It may be a long time before the service is offered in the European market, according to Mulligan.