Middelhoff, who came to Napster as CEO when Bertelsmann first got involved with the company, said: “Our solution is to take over Napster completely. We plan to buy out the former owners, most of all venture capitalist Hummer Winblad Venture Partners and some private investors like John Fanning, who is the uncle of the founder Shawn Fanning.
“We have made them an offer, because we believe that our strategy is the right one for the future of the company,” Middelhoff said.
Neither Bertelsmann nor Napster has commented on the news.
Napster has been attempting to transform itself from a free peer-to-peer file-swapping service into a legal digital music subscription service after being mired in court battles over charges of copyright infringements
The company was briefly able to offer a beta version of its service in January, but was shut down by order of the US Appeals Court. Two weeks ago, Napster put its plans for a members-only service on indefinite hold, though the company is still in negotiations to license music from the five major record labels
Legal challenges Bertelsmann was part of the original lawsuit brought by the Recording Industry Association of America (RIAA), a trade group representing the major record companies including Universal, EMI, Time Warner, and Sony. However, it dropped out of the litigation when it formed an alliance with Napster in October 2000.
Bertelsmann has extended loans to Napster to help the troubled company through its legal difficulties, in exchange for the option to bid for the entire company at a later date. According to analyst estimates, Bertelsmann has already spent between $85 million and $100 million on loans to Napster, and would be willing to spend an additional $30 million to fully acquire the company.
Napster is trying to compete with digital music-distribution companies backed by the major labels. It’s also going up against other operational services such as MusicNet, formed by AOL Time Warner, EMI, RealNetworks and Bertelsmann; and Pressplay, formed by Universal and Sony.
Napster once had 84 million users.