Yesterday, Napster laid off most of its 42 staff, including its
founder, Shawn Fanning. Today, Napster.com displays a simple
message: “Napster was here”. There is one link, to a crudely
designed image of a tombstone bearing Napster’s cat logo and the
message: “Ded Kitty” (sic).
Bertelsmann invested $85 million in Napster in the hope of
turning it into a legal, profitable service. Napster has not
functioned as a song-swapping service in over a year and the cost
of lawsuits forced it into Chapter 11 bankruptcy proceedings, a
means of keeping the company going while restricting the rights of
its creditors. The company was offered for sale as a going concern
in an auction.
Bertelsmann was the only serious bidder, offering an additional
$8 million. Other record labels, including A&M, Geffen and
Interscope, objected that the sale would be unfair.
Napster’s CEO, Konrad Hibers, came to the company from
Bertelsmann. Judge Walsh wrote:
“It’s abundantly clear that Mr Hilbers had
one foot in the Napster camp and one foot in the Bertelsmann camp
and was so fundamentally conflicted that this transaction was
tainted by his conduct.”
The result of the judge’s decision is that the company will be
forced into Chapter 7 proceedings – which means that its assets,
including equipment, intellectual property and its domain name,
will be sold off under the supervision of a court-appointed
trustee.
Yesterday, Bertelsmann confirmed that it is accepting the
decision. The company also confirmed that it has put its on-line
bookshop bol.com up for sale, but that it is keeping its stake in
BarnesAndNoble.com.
