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Napster: from Irrelevance to Bankruptcy?
In a move that seems to propel the ailing file-sharing company from growing irrelevance into bankruptcy, Napster’s board has rejected two offers in the last two weeks by BMG parent Bertlesmann to purchase the company.
As a result of the rejected offer, CEO Konrad Hilbers joined founder Shawn Fanning and other company executives in announcing their resignations.
Bertlesmann's initial offer, made two weeks ago, was for $16.5 million plus forgiveness of $85 million in debt, and was reportedly turned down due to Bertelsmann's refusal to protect VC firm Hummer Winblad partners John Hummer and Hank Barry from further lawsuits threatened by record companies.
The new offer, rejected yesterday, was for $5 million to $11 million in debt – a far less attractive deal.
As a result, the future of the music file-sharing Napster looks bleak. And with the thriving success of lower profile (but highly active) file-sharing services like Morpheus, Kazaa, and AudioGalaxy, the relevance of the once-pioneering Napster was already increasingly in question.
In addition, more music artists like Radiohead and Wilco are offering free online promotions, stepping around the label companies to reach their fans directly.
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