The University of Rochester pact follows a similar agreement struck last year between Napster and Penn State University, and marks the first time a private university has publicly announced a deal wit

Napster has inked a distribution deal for its on-demand subscription service with the University of Rochester.The news comes as Napster parent Roxio reports increased losses for the fiscal third quarter ended Dec. 31, 2003.The University of Rochester pact follows a similar agreement struck last year between Napster and Penn State University, and marks the first time a private university has publicly announced a deal with a digital music service.

"We're the legitimate alternative-we want to go where the demand is," says Aileen Atkins, senior VP of business affairs for Napster.

Under terms of the agreement, the 3,700 students living in University of Rochester residence halls will gain free access to Napster's streaming music service later this year.

Monthly fees for Napster will be funded by the university-not by individual students-on a trial basis. Permanent funding arrangements for Napster programming will be evaluated after the spring 2005 semester.

The university will look to extend the offer to all students and staff by the fall.

Also as part of the deal, Napster will work with the university's Eastman School of Music to offer original content from Eastman students on the digital service.

Napster's efforts to build a business are coming at the expense of Roxio's bottom line.

Roxio posted a third-quarter net loss of $25.6 million, or 92 cents per share, vs. a net loss of $9.2 million, or 47 cents per share, in the third quarter last year. Net revenue fell to $18.8 million from $26.4 million. Revenues for the company's online music division totaled $3.6 million-representing two months of operation for Napster. The unit was responsible for a pretax loss of $15.1 million.

The company last week announced that Napster president/COO Mike Bebel will exit following a brief transition period.

Roxio is estimating that Napster will generate $5 million in revenues in the fiscal fourth quarter.