Napster Said to Mull Bankruptcy as Execs Quit
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Napster Inc. Chief Executive Officer Konrad Hilbers Co-Founder Shawn Fanning and General Counsel Jonathan Schwartz are reportedly stepping down after trying to right the ship that sparked the most successful file-sharing phenomenon in the Internet's history.
According to a brief report in the Wall Street Journal, which cited people close to the firm, the online music start-up is also weighing a Chapter 11 bankruptcy filing.
The company did not corroborate this, but released the following statement: "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. We will be looking at additional steps in the coming week to further reduce expenses."
Redwood, City, Calif.-based Napster has been in trouble since it couldn't reach an acquisition agreement with Bertelsmann AG, which had funded the company to the tune of as much as $85 million in the past. Napster had gotten considerably leaner in recent months to cut costs, paring 30 percent of its staff on April 11. That followed a 10-percent workforce trimming on March 9.
Behind the scenes, the embattled firm has been trying to ink music licensing deals with the Big 5, which includes, AOL Time Warner Inc.'s Warner Music, Sony Corp. Sony Music Entertainment, EMI Group PLC's EMI Record Music, Vivendi Universal SA's Universal Music Group and Bertelsmann AG's BMG Entertainment.