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www.napster.com

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Napster Is Dead

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It appears Napster has run out of lives.

On Tuesday, the landmark file-sharing service's Web site, which 18 months ago was providing its free software to millions of new users a week, posted the words "Ded Kitty" over its infamous cat logo.

Earlier in the day, a U.S. Bankruptcy Court in Wilmington, Delaware, blocked the sale of Napster to its chief investor, Bertelsmann AG, citing a lack of evidence that the agreement was brokered in good faith.

Judge Peter J. Walsh ruled there was a conflict of interest in the purchase, particularly "divided loyalties" from Napster CEO Konrad Hilbers, a former Bertelsmann executive.

The court, with support from the music industry, also accused the German media giant of thwarting other companies to bid on Napster by valuing its bid at $92 million, nearly four times its estimated worth.

In Bertelsmann's proposed purchase, however, it would only pay about $8 million for the company, because it had already invested $85 million into Napster.

Hilbers and Napster founder Shawn Fanning were among 42 employees laid off Tuesday from Napster, which has been down since July 2001. Two workers will stay on to handle a Chapter 7 bankruptcy filing that is expected to happen Thursday, and will liquidate the company's assets, including their brand name.

"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 with most startup technology businesses, Napster's technology is of little value without the talented team that created it, so it is an occasion of loss on many levels."

Napster, which Fanning launched as a freshman at Northeastern University in 1999, rocked the music industry the following year and has since provided a blueprint for dozens of illegal copycat peer-to-peer services that are now a legitimate threat to record labels.

Although it was a friend to millions of music fans around the world, it was the foe of several artists, including Dr. Dre and Metallica, who filed lawsuits against the company.

The five major record label conglomerates also sued Napster and filed motions in the bankruptcy case, objecting to the sale of the company to Bertelsmann.

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