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Pornography firm bids for Napster
13-09-2002
by Ciaran Buckley

Nasdaq-listed pornography firm Private Media Group has made a bid for Napster, extending the drawn-out demise of the music file-swapping service.

Private Media said that it had offered to acquire the Napster trademark and the Napster.com Internet address for one million shares of Private Media stock, currently valued at USD2.4 million. If accepted by Napster, the offer would be subject to approval by the court that has jurisdiction over Napster's bankruptcy proceedings.

In a statement, Private Media Group said that it planned to create a peer-to-peer (P2P) network that would promote the sharing of pornography. It would also sell pornographic material on the site.

"Along with Hollywood and the recording industry, we have become increasingly concerned about the level of copyright infringement inherent in free peer-to-peer file swapping services," said Charles Prast, president and chief executive officer of Private. "We intend to use the strength of the Napster trademark to build a community for adults to share content provided by Private and our industry partners."

Spain-based Private Media Group trades on the Nasdaq exchange and claims to have the largest library of "quality adult content" in the world, according to Prast.

The announcement comes less than two weeks after a bankruptcy-court judge blocked the company's sale to German media giant Bertelsmann AG. Judge Peter J. Walsh of US Bankruptcy Court in Wilmington, Delaware, said he could not approve the sale of Napster's assets to Bertelsmann for USD8 million, because Napster did not show that the transaction was made in good faith and at arm's length.

Bertelsmann had hoped to resurrect the Napster service with music licensed from the major record labels, including its own BMG label. Napster hoped to become profitable by offering a secure membership-based service that would have provided royalties to record companies and artists.

Bertelsmann had previously offered over USD15 million for Napster, in addition to the USD85 million in loans it provided to Napster to keep the file-swapping service in operation, while it was being pursued through the courts by music industry firms for copyright infringement. The loans provided Bertelsmann with an option to buy 52 percent of Napster.