Napster files for bankruptcy, Bertelsmann still keen

Napster filed for Chapter 11 bankruptcy on Monday, just two weeks after its major creditor, the German media group Bertelsmann AG, had agreed to acquire the troubled Internet music service.

A Bertelsmann official, speaking on the condition of anonymity, said the Gütersloh, Germany, company is keen to acquire Napster's brand, peer-to-peer (P-to-P) technology and customer file assets, believed to be worth between US$8 million and $10 million. "Despite Napster's problems, we remain convinced that peer-to-peer technology has a future in the music industry," the official said.

On May 17, Bertelsmann had agreed to make $8 million available to pay Napster's other creditors. The German company agreed to write off its $85 million loan to the Net music company, based in Redwood City, California.

The Bertelsmann official declined to comment on what the company plans to do with the Napster assets if the court approves the sale. "It's too early to talk about this," the official said. "The court has to make the first move, but we are pretty confident that the plan put on the table by Napster will be approved."

Bertelsmann executives have said they hope to turn Napster into a subscription service. The Internet music company has been testing software that would support subscription services since the start of the year.

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John Blau

PC World
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