The company is under profit pressure in its core business of software sales and is spending heavily to try to launch Napster, and there are uncertain economics in that business," said Steven Frankel, analyst with Adams Harkness. "Their guidance is worse than expected and is causing me to lower my estimates for the second quarter," he said.

Roxio's chairman and chief executive Chris Gorog was upbeat on the call, referring to Napster as the "biggest brand in online music." Roxio bought the assets of Napster last year for about $5 million at bankruptcy auction and bought the Pressplay music service this year. "We don't feel that we have to do a dollar for dollar spend against other entrants in the market. The brand itself is giving us an awesome amount of penetration into the consumer marketplace," he told analysts on a conference call.