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1 Napster 2.0

Roxio Inc. bought the assets of Napster at its bankruptcy auction in 2002, with the intention of using these assets as the basis of a new legal online music service that would let users access music through a subscription or on a fee-per-song basis—and thus giving the record companies and the artists/composers (or their estates) the royalties they had been asking for. This service was confusingly dubbed "Napster 2.0", despite the fact that Napster Inc.'s now-dead version of Napster had actually been at version 2.0 for some years. It had a beta release in New York City on October 9, 2003, and went into full production on October 29. Napster 2.0 is not a peer-to-peer service, but aside from the name and logo this new version does contain some features (such as artist, album and song search) similar to those of the original Napster. It is one of several such services to arise in the wake of the success of Apple Computer's iTunes Music Store

On Monday, October 27, 2003, just 48 hours prior to the official launch of Napster 2.0, Napster posted a press release on their website stating that starting in November, people can buy Napster gift cards for $14.85 from Safeway, Rite Aid , CompUSA, Best Buy, and ExxonMobil. This card will have a scratch-off surface that will reveal a unique PIN that can be used with Napster 2.0 to give 15 credits for permanent download of music from the Napster 2.0 service. In another press release Microsoft announced that its new Microsoft Windows XP Media Center Edition 2004 will feature the Napster 2.0 service. Earlier in October, Napster and Samsung revealed the first Samsung Napster Player, which is currently available at electronic stores throughout the U.S. The press release also claims that Napster 2.0 supports all the leading digital music players currently released on the market, though it does not support the popular Apple iPod or iPod mini.

On February 23rd, 2004, Roxio announced that Napster 2.0 had sold 5 million tracks since its launch in October, 2003, and attracted roughly 1.5 million subscribers to its premium service. However, at this point the number sold was still far behind Apple Computer's iTunes Music Store, which by January 6, 2004 had sold over 30 million tracks. Analysts were further concerned when it came to light around February 23 that the Hewlett Packard (HP)-Apple deal to bundle iTunes with all new HP PCs in return for an HP-branded iPod had originally been Napster's deal, which was cancelled a few days before Napster 2.0's October 29 launch

On May 20, 2004 Napster announced that it had set up a British service ahead of iTunes to compete with the British legal download market leader OD2 co-owned by Peter Gabriel. There was some concern by British consumer groups about the higher cost charged in the UK which the company attributed to higher record company wholesale costs and the British VAT.

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