Konrad Hilbers, who resigned last week, is to be reinstated as Napster’s CEO. Napster founder Shawn Fanning quit the company at the same time. The two men were frustrated that they could not secure financing to keep the operation running.
Hilbers will also chair the company’s board of directors. Fanning will rejoin the company as chief technology officer, Bertelsmann said.
The $8 million will go toward paying Napster’s creditors.
Litigation The company had its wings seriously clipped when it was hit by a lawsuit from the major record labels, represented by the Recording Industry Association of America (RIAA). The service was ordered to remain offline until it could ensure that no copyright-protected works would be traded using it.
Napster has since struggled to pay mounting legal bills, while trying to re-emerge as a legitimate, subscription-based file-swapping service. Bertelsmann seemed the most likely ally, as the media conglomerate dropped out of the RIAA’s suit in late 2000 to form an alliance with Napster. It has already lent upwards of $100 million to keep Napster afloat.
Last month, Bertelsmann executives told the press that it planned to buy Napster outright, but the bid fell through when the deal was shot down by some members of Napster’s board.
Now that Bertelsmann has Napster, however, it may find that it has less than it originally bargained for. Over the last year, a host of potential competitors have come onto the scene, including major-label backed ventures such as MusicNet and Pressplay. And, of course, while Napster once boasted some 85 million users swapping songs on its service, the service is now silent.