Is Napster Finally Dead? Judge Blocks Sale of Napster to Bertelsmann 
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Wednesday, 04 September 2002

Despite pumping over $85 million in life-support money into Napster, it looks like German media giant Bertelsmann will not be purchasing the now defunct online music swapping service. On Tuesday of this week a bankruptcy judge blocked the sale of Napster Inc. to Bertelsmann AG yesterday citing conflicting loyalties by Napster executives.

Many industry insiders had speculated that Bertelsmann’s new CEO Gunter Thielen was not in favor of the company’s purchase of Napster. Thielen is currently attempting to sale back Bertelsmann’s online operations has met with several U.S. online retailers, most notably, to discuss the sale of, the online bookstore owned and operated by Bertelsmann.

Former Bertelsmann CEO Thomas Middelhoff wanted to use the power of the Napster name and user database to re-launch Napster as the premiere, legal subscription fee based downloadable music service. However Bertelsmann’s owners wanted to see the company put on a more conservative path and brought Gunter Thielen in to oversee the needed changes.

Napster CEO Konrad Hilbers, issued a statement addressing Napster’s concerns with Judge Peter J. Walsh’s decision to not allow the sale of the company to Bertelsmann. “Napster is disappointed with the bankruptcy court's decision not to approve the sale of the company's assets to Bertelsmann. As a result of the record companies' and music publishers' opposition, Napster's creditors will be denied substantial repayment and the company will likely be forced into Chapter 7 liquidation," stated Hilbers.

This decision by the bankruptcy judge and the lack of support for Napster by Gunter Thielen may spell the end for Napster. Napster has been off line for more than a year and filed for bankruptcy protection in June of 2002. Most die-hard Napster users have already moved on to other free downloadable music services such as Kazaa, Morpheus and Lime Wire. Will this open the door for former AM-FM radio CEO and now AOL Time Warner exec Jimmy di Castro to launch the definitive online music service through AOL? Many Internet users have fallen out of love with AOL’s service as of late. AOL has one of the highest monthly subscription fees for dial-up Internet service so perhaps it’s time for some more added values. AOL could see a boost in subscriptions and more customer loyalty if they were able to include a legitimate downloadable music subscription for a small addition to the $23.90 fee that they charge their subscribers.

Source: AP Newswire,

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