Napster Sold For $8 Million
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Less than three days after Napster founder Shawn Fanning and CEO Konrad Hilbers said they were leaving the project for good, along comes Bertelsmann with an offer they couldn't refuse:
Buy Napster for $8 million; clear out the company's debt and hire back most of the key players.
In addition to resuming his duties as CEO, Hilbers will also chair Napster's board of directors.
"I have believed from the start that this deal was a valid and beneficial deal for Napster, the best direction for the company under the current circumstances. While this has been a very unusual week, I'm pleased that I and my colleagues can move forward and give our full attention to Napster's future," said Hilbers.
"Bertelsmann understood our vision when they first invested in us. They still believe in that vision," said Shawn Fanning. "I'm ready to work with the many talented people at Napster to complete the new service and get it off the ground."
The once bad-boy of music file sharing with millions of users behind it at the height of its popularity, has been offline since July.
Bertelsmann AG's BMG Entertainment, which had funded Napster to the tune of as much as $85 million in the past, said Tuesday's Delaware Chancery court action, affirming the authority of Napster's Board, paved the way for this agreement.
"We are very pleased to have reached an agreement with Napster's Board of Directors," said Bertelsmann chairman and CEO Joel Klein in a statement. "We're happy to see Napster move forward with Konrad Hilbers at the helm. We are very committed to providing artists the best possible distribution opportunities for their work, and to providing consumers more choice and control. Creating new ways of doing business is never easy, but Napster will be at the forefront of finding business models that respect copyright, reward artists, and deliver entertainment value to consumers. Peer to peer is a transforming technology and we're proud to have Shawn Fanning continue to work on its development."
Other executives who will rejoin the management team include Jonathan Schwartz, General Counsel, Claire Hough, VP of Engineering, David Phillips, VP of Napster Services and Product Management and Oliver Schusser, VP of Marketing. Continuing with the company will be Manus Cooney, VP of Corporate and Policy Development and Lyn Jensen, CFO.
Napster, which vowed to turn itself into a money-making music subscription service when services such as MusicNet and pressplay were created by the Big 5 record labels, has been inactive online since last year after a federal court in San Francisco ordered it to remove pirated music from the service.
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's BMG.