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Napster chief to depart

Mike Bebel, who came to Napster after Roxio's acquisition of Pressplay last year, is leaving as part of a corporate reorganization that will also consolidate Roxio's offices in Los Angeles.

The head of Roxio's Napster digital music service is leaving as part of a corporate shuffle, Roxio said Thursday.

Mike Bebel, who came to Napster after Roxio's acquisition of the Pressplay subscription service last year, will be leaving the company after a "transitional period" and will be replaced by Roxio's head of worldwide development, Brad Duea. Roxio's corporate offices are also being consolidated in Los Angeles, instead of being spread out in several locations, the company said.

"We believe Napster will be a very significant contributor to Roxio's future, and headquartering the company in the center of the entertainment industry should prove advantageous," Roxio CEO Chris Gorog said in a statement. "We believe these changes will make Roxio and Napster more productive and efficient organizations."

The shake-up comes after just three months of operation for Roxio's digital music service, which has been slow to gain market share despite the expenditure of tens of millions of dollars in development and marketing.

Roxio spent about $5 million last year purchasing the Napster name in bankruptcy court, and nearly $40 million to acquire Pressplay, a subscription and download service jointly owned by Universal Music Group and Sony Music Entertainment. The company pledged to spend millions more on development and marketing, and raised another $22.5 million early in January, which it said it would spend on its digital media business.

The marketing effort has kept the Napster name in the public eye, but the company has been hard-pressed to catch up to market leader Apple Computer. Early in January, Apple touted research statistics that said the 30 million total downloads from its iTunes music store gave it about 70 percent of the digital music market.

In mid-December, Roxio said it expected music revenue of about $3.5 million for that quarter, split between its digital download and monthly subscription business. A Roxio representative said updated sales numbers would be released Feb. 4 when the company reports its quarterly earnings.

By contrast, RealNetworks on Thursday reported music revenue of $7.9 million for the final 2004 quarter, split between its Rhapsody subscription service and its online radio offerings.

Roxio has helped its visibility by striking a deal with Pennsylvania State University that gives students access to the company's subscription service as part of their student fees. Financial details on that deal were not released, but university officials said they had negotiated a discounted price for the service.

Duea has previously played a key role in negotiating licensing agreements with record labels, and he was also on the Roxio team responsible for the purchase of Pressplay, the company said.

Roxio has been going through an extended period of management shifts. In November, the company announced that longtime Chief Financial Officer Elliot Carpenter had resigned, and was being replaced by Nand Gangwani.