Roxio, RIP

Roxio – the manufacturer of Easy CD Creator and Toast, and the parent of Napster – is dumping its software business and becoming nothing but Napster. It’s an interesting move but it’s a huge gamble: Napster’s future is by no means certain, with some analysts suggesting that as little as 4% of digital music consumers are interested in a music rental service.

It’s strange timing for such a move: Forbes Magazine reckons that Napster needs to bring in around $300 million per year to break even, but the firm predicts just $40 million in income this year; the $80 million sale of its software business will certainly help to bridge the gap, but that still leaves a shortfall of $180 million without any future revenue from software sales and licensing.

To be fair, Roxio’s core business is under threat: CD burning is an integrated part of most media players, from iTunes to Windows Media Player, and few Apple users will shell out for Toast & Jam when the combination of iTunes and iDVD covers all their CD and DVD burning needs. However, cutting off such an important revenue stream while Napster revenues aren’t exactly fantastic is a very brave move. Here’s hoping it doesn’t turn out to be a suicidal one.