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e-business: Napster goes to its grave as US bankruptcy court blocks sale.

Napster, the revolutionary Internet song-swap service hailed by millions of music fans but damned by the powerful recording industry, has finally gone to its grave.

The company's website was officially shut down after a US bankruptcy court blocked the firm's sale to German media giant Bertelsmann AG.

A Napster spokeswoman said the company had closed its doors and terminated all but a few of its remaining 42 staff as it prepared to go into liquidation.

Napster's website - - turned black, with a mournful tribute 'Napster Was Here.'

A click-through image on the site - founded by a US college student as a project in 1999 - showed a scrawled grave stone, the company's cat head logo with x'd out eyes and the comment 'Ded Kitty'.

Napster's swift demise followed a decision by a Delaware court to block Bertelsmann's $9 million offer to creditors to buy the company's assets after record labels and songwriters opposed the deal, arguing it was not a fair price.

Faced with no financing, no revenues and no other buyers, Napster's chief executive, Konrad Hilbers, said the company would now switch reorganisation efforts to a Chapter 7 liquidation.

Mr Hilbers and Napster's youthful founder, Shawn Fanning, were among those who lost their jobs.

'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,' Mr Hilbers added in a statement.

'As with most start-up technology businesses, Napster's technology is of little value without the talented team that created it,' he added.

Napster, which at the height of its popularity commanded a cult-like following of some 60 million users, fell foul of the powerful recording industry, which targeted it as a dangerous new vehicle for copyright violation.

Napster's service was simple enough - users logged on to its site, located music files that they wanted, and downloaded them to their own computers for free.

But while users flocked to the service the record industry itself quickly put together a legal effort to stop Napster in its tracks.

After a lengthy court battle, Napster was forced to shut down last year after major record labels convinced a federal judge it violated copyright laws.

But the company had held out hopes of reviving itself as a legitimate, subscription music service that would pay royalties - an effort that received a major boost when Bertelsmann's former chief executive, Thomas Middelhoff, announced the European media giant would buy Napster out of bankruptcy and help it restructure.

But the buy-out bid did not proceed smoothly. Bertelsmann's reaction to the court decision was brief.

'We accept the court's decision that the sale of Napster's assets to Bertelsmann has been denied and that the purchase will not proceed,' said a spokesman.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Geographic Code:4EUGE
Date:Sep 10, 2002
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