Napster reportedly near bankruptcy

Dow Jones reported late Tuesday that Napster, in steady decline since being forced to halt distribution of bootlegged music, was headed toward bankruptcy in the wake of CEO Konrad Hilbers' resignation.

Napster confirmed that Hilbers was leaving but said the company has not filed for bankruptcy. Officials, however, would not say whether such a filing was near.

But the company has yet to land a distribution deal with one of the five major record labels, considered key to its survival, after trying for nearly a year.

"We deeply regret that we have not yet been able to find a funding solution that would allow Napster to launch a service to benefit artists and consumers alike," the company said in a statement. "We will be looking at additional steps in the coming week to further reduce expenses."

Hilbers reportedly is leaving the company after only 10 months on the job. He came over to Napster from one of the five labels, Bertelsmann AG (DE:522994: news, chart, profile). Bertelsmann forged a deal with Napster in late 2000.

Hilbers took over the company shortly after Napster stopped distributing bootlegged copies of music, the subject of a contentious lawsuit filed by the record industry's biggest names, including Bertelsmann, Vivendi Universal's (V: news, chart, profile) Universal Music Group, AOL Time Warner (AOL: news, chart, profile), EMI (UK:EMI: news, chart, profile) and Sony Corp.'s (SNE: news, chart, profile) music division.

 

You mean there's no money in helping people steal music? Whodathought...

 

Actually, thats when they were profitbable or should I say,a viable business. When the court ordered them to stop.

Meanwhile, places like download.com that get hundreds of thousands of hits for downloads like Kaza, they sell more banner ads and more than likely give kickbacks to Kaza...

 

Yeah, it's funny the way that worked out. Turns out, plenty of folks will show up for free music, but as soon as you mention the word subscription and pay-for-play, you find a lot less interest in it.

The Napster paradigm was basically "free music". If you change that, it's no longer Napster. Too big of a shift. The Napster cache is lost. They become superfluous at that stage -- why cut them in on a deal? The record industry doesn't need them, they just need them to not help folks rip them off.

Kazaa is another issue. It won't be long before SOMEBODY starts dealing with them. It's a little more difficult because it's not a sole industry being attacked. Napster was really an assault on the record industry, whereas Kazaa is an assault on copyright laws in general. Who's gonna pay the lawyers to go after these folks? Software companies? Video distribution companies? Record publishing companies? The Government? Once they settle on who's gonna bring a suit, they'll come knocking...