Napster Officially Done

File-sharing company laid to rest

September 4, 2002 12:00 AM ET

Napster officially took its last breath on September 3rd when an attempted buyout by Bertelsmann Entertainment Group (BEG) -- which owns several record labels, including Arista Records and J Records, homes to Santana, Alicia Keys and dozens of others -- failed to go through bankruptcy court.

Wilmington, Delaware bankruptcy court Judge Peter J. Walsh cited a conflict of interest for Napster CEO Konrad Hilbers, who was a former Bertelsmann employee. Judge Walsh's decision was also supported by Universal Records and other major labels, who cited Bertelsmann's reluctance to turn over documents related to the loans and relationships between it and Napster. Those same labels were involved in the initial lawsuits that began Napster's slow demise.

In May, Bertelsmann laid out $8 million towards the payment of Napster's creditors and funded the company's efforts to relaunch the site as a pay subscription service that would block the trading of unauthorized, copyrighted material. Napster had been offline since last July after two years of legal wrangling with the Recording Industry Association of America.

"Napster is disappointed with the bankruptcy court's decision not to approve the sale of the company's assets to Bertelsmann," Hilbers said in a statement. "As a result of the record companies' and music publishers' opposition, Napster's creditors will be denied substantial repayment and the company will likely be forced into Chapter 7 liquidation."

Napster subsequently laid off all its employees and the Web site's home page sports the Napster logo with "Napster Was Here" written below. The link takes visitors to the service's final resting place, a picture of a gravestone with the Napster cat logo and the words "Ded (sic) Kitty."

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