Napster founder Shawn Fanning and chief executive Konrad Hilbers resigned yesterday, along with other top executives, suggesting that the online music-sharing software maker might be on the brink of bankruptcy.
In a letter to employees, Hilbers, who took over as the company's head less than a year ago, stated that the company's decision not to accept an offer from Bertelsmann was his motivation for leaving. Hilbers saw the acquisition as a means to infuse the struggling company with sufficient funds to keep the company's day-to-day operations functioning.
A statement issued by the company referenced the nixed Bertelsmann deal, but remained optimistic: "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."
After two years of legal tangles with the Recording Industry Association of America and artists like Dr. Dre and Metallica, the embattled Napster took its service offline last summer in order to develop and implement a subscriber-based system that would block the trading of unauthorized music. Multiple versions of a reconfigured service have been tested, but a re-launch has yet to materialize.