Roxio -- the company that purchased Napster last year -- yesterday announced that they agreed to acquire Pressplay, the online music service previously operated by Sony and Universal. The US$40 million deal will be combined with the old Napster brand to create a new Roxio-operated online music service that will no doubt compete with Appleis new iTunes Music Store in the Windows market. A Seattle Times article examines the purchase:

The company said it plans to use pressplay as the foundation for a new online music service under the name that set Internet music file-swapping in motion. The deal means Universal and Sony will become minority owners in a service named after their former nemesis. "This is Napsteris second coming," said Phil Leigh, an analyst with Raymond James & Associates. "The record labels crucified him, and now heis going to come back and be their savior. "The new service will "retain the overall feel and vibe of Napster," said Chris Gorog, Roxiois chairman and chief executive. He would not elaborate on details, including whether the new Napster would include the famous file-swapping technology that upset the record industry and doomed the company in a sea of copyright infringement litigation.

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The deal comes on the heels of the surprising success of the Apple iTunes Music Store. The online pay-per-download service for Macintosh users, which boasts virtually no restrictions on how and where the songs can be played, sold more than 2 million tracks within 16 days of its April 28 launch. "That success reinforces our belief of the future profitability of selling music online," said Larry Kenswil, president of UMG eLabs, Universalis new media division.

Pressplay wouldnit give specific customer figures, but it "didnit have enough subscribers to satisfy us," Kenswil said. "For sure, we see the brand name of Napster as increasing that tremendously. "While the new Napster could become a major online music outlet for Microsoft Windows users - with a catalog of music from all five major record labels - analysts say many challenges lie ahead.

For one, users associate Napster with "free music," said P.J. McNealy, analyst with Gartner G2. "Roxio is going to have to spend quite a bit of money re-establishing the Napster brand ... as a pay-for-music service," he said.

Because of Appleis success with less copy protections, the record industry will be willing to cut similarly liberal licensing deals with Roxio and other online music sellers, Kenswil said. "There has to be some of kind of protection to prevent people from spraying thousands of downloads around, but at the same time, we have to let people enjoy music, and thatis what weire doing now," Kenswil said.

More information on the Roxio purchase of Pressplay can be found in the Full article at the Seattle Times, and another article at CBS MarketWatch.