Roxio provided an update on its business outlook for the quarter ending December 31.

Roxio's digital media software business is performing ahead of the Company's expectations due to the strong performance of category leading products, Easy CD & DVD Creator® 6 for Windows, and Toast® for the Mac platform.

"We are increasing our guidance for software revenues to approximately $14.5 million and look forward to a very substantial increase in software revenues next quarter based on the upcoming release of Creator 7 in the first calendar quarter of 2004," said Chris Gorog, Roxio's Chairman and CEO.

The $35 billion dollar music industry is just beginning its transformation from physical to online distribution. While Napster has quickly established itself as one of the top two players in this sector, Roxio believes this very exciting market is still in its infancy as evidenced by reports from Neilson Soundscan indicating total single track sales last week by the entire online music industry were approximately 1.2 million.

"Given this current uptake rate by consumers, we now expect revenue for our online music business to be approximately $3.5 million for the December quarter. This represents a quarterly run-rate of approximately $5 million given that Napster 2.0 launched at the end of October. We expect Napster- related spending will decrease substantially going forward as we move away from our Launch quarter and into steady-state marketing activities. Napster has a number of exciting initiatives underway including our prepaid retail cards, the Napster BurnPak(TM) sold at retail and the agreement with Penn State for the Napster subscription service, which should all positively impact Napster's financial results starting in early 2004," concluded Mr. Gorog.