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Bertelsman Seeks to Buy Napster
jbc writes: "SF Gate is one of several places carrying the story that Bertelsman, which already invested a significant amount of money in Napster, is now looking to buy Napster outright. This is based on an interview with Bertelsman CEO Thomas Middelhoff that was published last week in the German newspaper Die Welt."
You can have it, we're finished playing with it by now. :)
It'll probably end up like that Simpsons episode where Germans buy the Springfield nuclear plant from Mr. Burns, then when they realize it's completely broken down and profitless, they're forced to sell it back for a fraction of what they got it for...
By owning it, Bertlesmann can easily enforce the licenses on any BMG artist. With a label owning Napster, it lens it some legitimacy, and other labels may follow suit and sell licenses for their artists as well.
An interesting experiment, indeed.
If I weren't nailed to the penis, I'd be pushing up the daisies!
Perhaps Bertelsman is taking a different strategic view of what is going on? They see the "other 4" going down an increasingly miserable road and decide that they are going to differentiate themselves by trying a sort-of napster like model (where piracy becomes a cost of doing business - like software). That's my guess.
Napster served a point at one time to show the world that mass-user file swapping technology is possible, but it's obsolete technology. It's like wanting to buy Windows 3.1. File-swapping software has evolved.
- BETA-Max Videotapes, Inc.
- Disco Ball factory
- Menudo
- 386 12mhz, 20mb HDD, 640k RAM and a copy of Commander Keen
This comes on the heels of dozens of other mergers since the 1996 Telecom Deregulation Act. While I agree that Napster is not terribly relevant these days, it does look like the media titans are gradually getting more savvy about the Internet. Will they buy up the current crop of music-trading networks next?
Michael Powell of the FCC is actually actively lobbying to tear down the rules against greater concentration of media mergers. And of course the RIAA and the companies that are buying up all the radio stations (Clear Channel, Infiniti, etc.) are helping to shut down webcasting. Pretty soon the media landscape could look something like this...
As long as we're selling things that no one uses anymore, I've got a stairmaster, 3 type of ab machines, and an upright piano that you might be interested in...
------
Today's Top Deals
What is left to buy if the userbase has left?
the brand name. geeks may have long since forgotten about napster, but there are plenty of middle-aged pc-literate consumers who haven't.
commenting to your useless post and buring karma in the process... priceless
Kind of interesting that Napster can now be bought for just 15 million dollars (or 80 + 15 million what have you). Compare that to them offering to pay the music industry a billion dollars just a short while ago, this pretty much says it. Naspster is dead.
-- Kircle
Bertelsman, which already invested a significant amount of money in Napster, is now looking to buy Napster outright.
I wonder if they'd be interested in buying a 1982 AMC Spirit with a blown engine. My neighbor's got one just sitting there, and these people sure sound like suckers to me.
--saint
well how about the US First Amendment? seeing that congress does not want to use it any longer *cough*SSSCA/DMCA*cough* :-)
I am the Alpha and the Omega-3
We are supposed to be a community of geeks and as such do not know a lot on the business side of things.
These businessmen should probably know a thing or two that we don't and have a business plan to make the outfit succesful. Like it or not, we cannot dictate what makes for a successful business since the net community has a bigger slice of "consumers" that will hungrily lap up anything it sees.
Return the bells of Balangiga.
Enough is enough, no more April Fools jokes!!
No one uses napster anymore. No one is going to pay to download questionable MP3s. No one will make a profit on this model.
The shareholders should sell for whatever they can get. If this company is dumb enough to buy a dead product, LET THEM. I mean, take the money and run.... as the old saying goes...
A fool and his money are soon parted...
Does this mean that Napster is finally out of beta-mode?
Correct me if Im wrong, but the perspective of Napster going back online is somewhat non-existent. Ok, what are these people buying them? The network? The servers? The old technology? As far as Im concerned the only stuff they might be interested in is the user database, which is kinda old since napster is not used anymore for more than 1 year (im correct?) and this is time enough for most of its newbie users to change e-mail address (thus transforming the database into an whole bunch of useless e-mails and usersnames)...
Fabio - Sumare/Sao Paulo/Brazil/South America/Earth/Solar System/Milky Way/Universe
http://www.morroida.com.br
You mean XM radio is a complete failure, where users are unwilling to paid for commercial free music feeds? Why would consumer be unwilling to pay for feeds that are commercial free and consumer has complete control over the content?
Consumer is unwilling to pay too much for music rental, not against it in principle. Won't be as popular as Napster used to be because of the difference in price.
When that happens in real life, instead of selling the company back, everyone sells their old stock certificates and t-shirts for camp value.
If there were to be an exception, though, it would be napster - for one moment, the most visible symbol of online freedom.
that record companies will sue Napster's ass off then buy them back so that they will have a brand name + infustcture (sp) for their own music distrubition channel?
kawai
The only way napster could get people to pay for a service provided freely by others is to make a vast improvement. Looking at what they have now, they offer no new features over Gnutella clients, except perhaps chatting and "paying the artists" which isn't enough to make most people pay for it. The only reason to use it is to clear your conscience. Just buying the cd (used, possibly) is cheaper for that.
am i just being nieve or do they really think people will pay for something they can otherwise get for free with any number of other programs out there (ie. kazaa, morpheus, etc...). I'm sure there will be the odd person out there that will support their efforts and pay the subscription fee, but really... I can't see too many people doing this.
'Go for the eyes, Boo, go for the eyes, aaarrrrrrrr!' -- Minsc
Usually exercise machine purchasers fall into three categories:
Many adults like myself take a civil disobedience type approach to music sharing. I buy as many CDs (if not more) than I used to, but I unabashedly use these services to make sure those CDs I buy are going to be worth it. People that fall more or less in this category (I think) are waiting for a good digital music policy from the major labels(although there seems to be no light at the end of this tunnel).
However, as I've seen with my little sister and her friends (and others of the pre-teen to teen age group), they have "grown up" on free music whenever they want it, so "why buy the CD?". At this young age, none of them had given any thought (nor had I at that age) to Intellectual Property and the other issues regularly discussed in the heyday of Napster.
It is the difference between "The artist certainly has rights, but the industry is subverting the process to their substantial benefit, and this must be altered." and "Hey, we have a right to free music, how dare you take it away?"
And obviously, this demographic is too large to ignore.
-----
Whimsiprotocol - n. 1. Standards of action or thought developed in a fit of ineptitude.
You can have no business model, no immediate prospects for profit, be crippled by lawsuits, and have the little service you offer stifled by court order - yet still walk home with $15 million extra in your pocket.
I bet Shawn Fanning has no regrets.
Bertelsman bought myplay on May 30th, 2001. Fast forward to early 2002, Bertelsman closed myplay's offices, laying off all but a couple of engineers in charge of wharehousing the software.
Is this some new tactic to buy and close music software companies?
- You don't know how to maintain a station wagon either!
Honestly, who cares, Bertlesman is probably just buying Napster to put it out of its misery. Napster's new (and old) business model was fundamentally flawed from the start. Yes, of course lets charge people $9.95 a month to pirate^H^H^H^H^H^H "share" songs with each other. First thing, pirates, warez dudes, whatever they're called don't, dare I say won't, pay for the right to pirate stuff. That totally defeats the purpose of pirating material-i.e. not having to pay for it. Second, not to beat on a dead bush, but look at the fifty bazillion other file sharing programs online right now. Sure none of them have duplicated the ease and reliablity of Napster, but they get the job done, and other than spyware (which has its own problems), they do not cost you a thing. Napster, can be bought out for all I care cause regardless of when or if it comes back no one is going to pay for a service they can get free.
________________
The sun beams down on a brand new day, No more welfare tax to pay, Unsightly slums gone up in flashing light...
<state the obvious> Napster is not the phenomenon, filesharing is. </state the obvious>
However, that they are ready to pay between $15 and $30 million USD makes me wish I had written a peer-to-peer with central DB software client. Yikes.
Conversion Rate Optimisation French / English consultant
Who will use the service? Perhaps the millions of people who claimed they *wanted* to pay the artists, but had no legal alternative for easy-to-download-music.
Sadly, Napster's inevitable failure under Bertelsman will only confirm conventional industry wisdom: those who say they *want* to be legal are lying. Most users care more about getting their content for free than the 'convenience' they claimed Napster offered.
--the verb
Can we please get a "Napster" topic here so that I can filter it from the slashdot homepage?
I mean really...
So, first the music industry (BMG included) pummels Napster into oblivion with lawsuits, then once the company has had enough injunctions to keep it from operating at a profit, and once their stock is on the verge of being downgraded to junk status, they buy them up.
Isn't there a law against that already?
Excellent.
It hurts when I pee.
Wasn't it last year when Berltlesman tried to get in league with Napster, and that CEO was removed? I thought I read a lot of press about that being a very bad move for BMG. CEO was for it, but the board was not.
The first record company to properly embrace the internet may be the first to recieve money from me when I end my boycott of the RIAA.
.WMA format' or 'you cannot legally burn it to a CD.'
It's possible that they'll revamp Napster and turn it into something interesting. For example, what if they put up a server with tons of bandwidth and a ton of interesting songs available, complete with a reasonable per-song price. That'd be far better than any other record label is producing nowadays and would be a step in the right direction.
I just hope they don't put stupid restrictions on it like 'you have to use
Maybe I'm being over-imaginitive, but it'd be nice to see a music company show some interest in the new market created by the internet, instead of trying to shut it down.
"Derp de derp."
It will never work. Napster is a dead cow, the brand name in this case is tied with keywords like "controversy" and "piracy" in the mind of the average consumer -- and "server down"/"lame" in the mind of the l33t. So buying it for its brand name is not too smart. And the code was not much to begin with. Why bother?
1) Lift up toilet seat
2) Empty wallet into toilet
3) Flush
4) Repeat as you feel is necessary
Nosce te Ipsum
Will they buy up the current crop of music-trading networks next?
:)
In an unrelated story, Disney is seeking to buy Usenet & FTP
it doesn't seem to be a good tactic given the fact that napster is dead already... (see earlier posts) not evrything is a conspiracy, sometimes companies have strange business tactics :-)
Oh yeah, .com economics. I'd almost forgotten. Actually, this looks a lot like a sort of weird poker game:
The one thing that I would bet on will be that the first thing Bertelsman does is to have a good hard look at Napster's accounts and figure out what the hell did happen to that $80 million. They can't have spend it all on lawyers and a crackpot crippleware scheme, surely? Surely!
If you were blocking sigs, you wouldn't have to read this.
If what I'm thinking is right, Napster costs money to use and people have already jumped ship to other free incarnations of the same idea. The only thing left to buy is the few users that feel morally obligated to pay for the service (who probably weren't along for the ride in the early days). It'd be nice to have that kind of green to throw around stupidly.
Heroscape, it's like legos combined with anachronistic wargames.
...how is Napster a "business"? I mean, Shawn Fanning wrote a program, called it Napster, put it on a website, called it www.napster.com, and that's it. Napster wasn't adware or spyware, Napster.com didn't (IIRC) have ads, and no one was supposed to (ideally) ever pay any money ever. Now of course there's going to (supposedly) be a pay to use Napster sometime in the future, but that may or may not ever come to fruition.
The part I don't get is how is Napster a "company"? How did they ever make money? Did they ever make money? They had venture capitalists and investors, but what were they telling these people? "Hey we've got a free program and a free website and a server but don't worry - some day we'll see profit roll in somehow!" Was the subscription model always the plan? Has this model (free services first, then charge once the investors and VC's want some actual money) ever worked? And why haven't all these VC's and investors pulled out by now? If the legal throubles hadn't killed off Napster, the investors and VC's surely would have by now.
I have an online side business that doesn't do a whole lot of business yet. If I were to sell it, I probably couldn't get $1000 for it. If it made millions of dollars a year I could get a good price on it. As far as I can tell, Napster has never made dime one - how is it we're talking MILLIONS for Napster? Who are these people fooling?
Schnapple
The problem of the day is the decentralization of power. Groups like the RIAA, and individuals like Senator Hollings have caused this to be be problem of the day (for us, at least ... there are others with much more urgent problems, but we are us).
.. buy direct!" works, but the number of such is quite limited. Direct purchase of music over the internet? Possible. CDs seems a more likely format than MP3s, if only for quality reasons.
I would be quite pleased if I saw a decent way to implement the decentralization of authority. Since I don't, I look at every social challenge to centralized authority as a possible good thing. The RIAA is going for maximal visciousness and to hell with the bystanders anyway, so there is no reason to consider how they feel about things. Therefore, the question to me becomes:
How can the musicians be supported without simultaneously supporting the RIAA?
This doesn't mean how can I as an individual support some particular musicians. I could clearly send them a check. It's how can we structure social interactions so that musicians are supported, and the RIAA is not. The clear and obvious answer "Support you local musicians
There exist problems here. Musicians are frequently coerced into signing exclusive agreements. Etc. So maximally popular groups will tend to be those that have the most advertising dollars spent on them. But this doesn't equate with the maximally talented groups. Perhaps groups that aren't picked as "STARS!!" could sell CDs directly on the web (from their home page) with the MP3s being used as cheap advertising? It might work.
I think we've pushed this "anyone can grow up to be president" thing too far.
It's a hole in the internet you throw money into.
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
You seem to have an odd view of a complete failure. In the first 8 weeks it was available, there were 30,000 subscribers for XM. These people had to pay $300+ for the XM receiver as well as the $10/per month subscription fee. Have no idea of current subscriber base.
Granted, that $300K/month is not even close to enough to keep XM-Radio afloat, this does not imply complete failure of the music-rental business model. In fact, it is direct evidence that it could be successful, provided the economics are right.
Napster's dead baby. Napster's dead. Being able to find RIAA approved song X on-line, quite frankly is a minute thing. What I'm interested in is the songs that for the most part NEVER crosses that line, and likewise, presence on a Bertelsman-run Napster would be unlikely. What I used Napster for is a combination of unreleased material live "bootleg" recordings and indy music. Things that the RIAA for the most part have no control over. I did use Napster as on-demand radio at times sampling new music, then either rewarding the artist and deleting and I used Napster in-lieu of a MP3 ripper on my old 166 computer, too slow for a good rip, but could run Napster. (Which I need no longer) There's more at stake than copyright in this matter. P2P threatens to break the monopoly the RIAA and its clients have on music inside the US. That's the major issue here.
I've got a bridge to sell him...
autopr0n is like, down and stuff.
Is Napster a privately-held company or can I download shares on the P2P network?
Perhaps I'm being a bit redundant after all the other posts here, but I feel this bears repeating: It seems that the record companies are taking our purchasing habits for granted. We don't HAVE to buy CDs, but we do. I've watched prices go up, and I'm appaled at the markup on these discs. It probably takes less than 50 cents to print and manufacture these things, plus the studio costs. Does anyone else think $15 dollars a CD is price-gouging? It's especially bad that many CDs now are in the 20-40 minute realm instead of the 74 or even 80 that the CD can hold. You can fit Enya's last 2 releases onto an 80-minute CD, in fact. I might not mind this if the artists served as the beneficiaries of this, but it seems like most artists get less than a dollar per CD sold. I'm curious to find out where all the money goes. So FIRST, the companies insult us by keeping the prices high and keeping the artists out of the loop with profits. SECONDLY, they attempt to squelch filesharing, both by legal means, and by corporate means. Now, the companies seem to be under the illusion that we WANT to pay for a limited selection of tracks we can only listen to a fixed number of times without transfer. Its worse than the free filesharing servers (KaZaa et al), and it costs money. THIRD, the record companies are trying to prevent computers from playing audio CDs. I've even heard that the latest Celine Dion CD will crash your system if you play it.... though I'm unsure if that's the fault of the music or the added "CrapTus Shield" software on it. I think the record labels made a mistake by taking down Napster.... now, decentralized alternatives are now in place that probably won't flinch no matter how many court orders you fling at them. Taking down Pablo Escobar didn't end the drug trade... it just decentralized it, and other, smaller drug dealers cropped up to take his place. The record companies seem to have done the same thing: there are about 3 or 4 major filesharing servers now instead of one, and the largest one (KaZaa) has about 1.5 milion people logged on at a time. Though I think it unlikely, if the services we have now are shut down, more will just pop up in their place. I think the labels have lost the online war, at least for now. On the copy-protected CD issue, I think that the music labels underestimate the ire of consumers and the intelligence of the hacker community. No matter HOW MUCH copy protection you put onto your media, there will always be some way to break it. By putting this copy protection onto the CDs, the companies risk alienating customers who aren't even trying to pirate in the first place -- some CD players have a hard enough time playing regular CDs, much less copy-restricted or copy-protected ones. We must BOYCOTT these copy-protected CDs, and also meet the industry blow-for-blow by cracking this copy protection. If we can prove to the music industry that it is not feasible (money-wise, of course) to implement restrictions on our music, they might back off of this. But make no mistake, we are heading for a war. This is but one facet of the whole global-against-regional fight that seems to be going on as multinational corporations seek to expand. To borrow a quote from a certain comic-book inspired movie -- "I may not be on the right side, but at least I've chosen." I implore other /.ers to chose also.
76,000 as of Apr 1.
Of course, you seem to have an odd view of success. When KPMG said, on March 19, 2002 that XMSR's need for additional financing "raises substantial doubt about our [XMSR's] ability to continue as a going concern", the stock dropped 13%.
> Granted, that $300K/month is not even close to enough to keep XM-Radio afloat, this does not imply complete failure of the music-rental business model. In fact, it is direct evidence that it could be successful, provided the economics are right.
Sure, anything can be successful, provided the economics are right.
1) We spend gazillions of dollars building a satellite radio system,
2) The economics become right!
3) Profit!
As you correctly point out, their current revenues aren't even close to keep 'em afloat. Given how far away they are from profitability, I'd say that's an indication, not that it could be successful, but that the economics are wrong. How wrong? Well...
They project that they'll end the year with 350K subscribers. But even $3.5M per month - call that $50M/year - is a far cry from profitability when you're spending >$280M/year (indeed, $130M in last quarter of 2001! $53M on sales and marketing, $40M on operating costs!) to keep the business running.
Source: XMSR 4Q announcement
Let's see. It cost them $135M to run the network last quarter. They took in $500K in revenue - $245K from subscribers, $294K from advertisers, on 27000 subscribers. *giggle*
They have about $200M in the bank.
If it costs them the same $135M to run it this quarter (1Q02) and they had 76000 subscribers, then I'd be hard pressed to see them get more than triple that. But I'm feeling generous - so let's quadruple the revenue - that's still only about $2M of revenue. Hey, double it to $5M for all I care.
If my guesses are right, that leaves 'em with $200M - 130M = $70M in cash as of April 1st.
In a business that's costing them $130M per quarter.
Unless I've grossly overestimated the business model (but "system operating costs" and "sales and marketing" don't look like one-time startup costs to me), or grossly underestimated subscriber growth (as in, by an order of magnitude - but even 350,000 subscribers at my generous $22/month estimate will only give $23M per quarter), XMSR will have to get more financing (issue more stock, get a loan, issue bonds or convertible debentures) before summer, or they'll no longer have the cash to pay the bills.
We'll find out in a few weeks when their first quarter report comes out.
Personal opinion - XMSR is cool tech. Sometimes, being first to market with new tech is an advantage (Amazon, eBay). But other times, particularly in industries with high startup costs, it can kill you (ILEC-vs-CLEC, all the dead DSL companies, and now most of the telcos). The early bird may get the worm, but the second mouse gets the cheese.
As always, do your own due diligence. I have no position (long nor short) in XMSR. The ramblings of a geek on Slashdot are no substitute for professional investment advice.
Is this the same BMG that runs the 12CDs for the price of one deal? If it is, I could see them enticing people by putting up a server with tons of bandwidth and their entire catalog available.
In short, I think it would work a lot like a music club does through the mail, only with MP3s instead of CDs. I think that's a business model that would work, although I don't understand what they need Napster for.
Head down, go to sleep to the rhythm of the war drums...
I dind't realize it was BMG that was doing that.
Well that sucks. I think you're right. If they're protecting the CD's, then that means that the MP3 version of a song has value aside from the CD version. (even though it doesn't, not that I'd pay for.)
That probably means that even if you have the CD version of the song, they'd still expect you to pay for the Mp3 version. That doesn't fly so high with me. I'm willing to pay a modest fee for them to deliver it to me, but the cost of an album's worth of Mp3's better not exceed the album.
I wish I could just buy a 'certificate' for a song. If I put a CD in my drive, then the songs on the CD earn a free certificate. Then I'd be free to download MP3's all I want, provided I can show I have a license for them. The certificate price of individual songs should be pretty cheap though.
That way, no matter how I recieved a song (i.e. copied a friend's, downloaded from the web, or bought a collection on CD), I could pay the company who produced it. If they're willing to treat me like an honest person, I'll respect them by paying for it.
"Derp de derp."
Napster was first, is most familiar to users, and has the largest market share (even after being dormant for a few months). It's still the best designed, easiest to use music downloading application. It set a standard which will now be hard to compete with.
Eventually, one of them had to do it. Bertelesman took the initiative. Sony, Universal, and Time-Warner snoozed on this one- and lost.
Does Napster have any (puke) software patents that Vivendi might want to get its fingers on?
pr0n - keeping monitor glass spotless since 1981.
Unfortunately I don't believe record companies could produce a music-buying model that is better than the one we have right now. We can get practically any song we want for free. How can they beat that? Internet music trading has come a long way, and it really doesn't have that much farther to go.
Everybody says they're willing to pay to download mp3's but(1) what's the highest price you'd pay per song? People talk all the time about $1 per song, but I think you are dreaming if you think it'll be that low.
(2) You can honestly say you'd pay for something when it's completely free somewhere else?
agree mostly, but who wants to pay the same amount of money for a cd you make yourself? I want the literature, the artwork, and all that kool stuff (that is assuming we would pay the same price)
Doesn't this prove the point of the RIAA. IE: pirates only wanting something for free.
You don't "create" the music at all, you are merely copying it from someone who put their hard earned money into producing it: artists and or record labels.
To restate what I said before, it is just trying to squeeze some of my hard (LOL) earned money out of me for the sake of a record company and in return I get useless goods
really? useless goods? Then why download it for free if it's so useless.? because you're greedy. 1000 times more than any record company. At least they aren't coming to your house and directly taking money out of your pockets by force.
What's your point righteous one? I am glad that I have found the one person in this world who doesn't cheat anyone, wow what a priviledge it is to even be on this forum with someone like you.
Give me a break fella, first of all pirates do want things for free that is why they are pirates. Second, artists get money from their creation? Nope, I really don't think that the 3 or 4 cents cut on a sale of a cd is hurting them at all. If you side with RIAA realize that you are siding with an empire that has STOLEN individual artists rights to their own art, work, creation, or whatever you want to call it. Do you really feel this way or are you wanting to impress yourself with your comments?
In regards to the greedy part, glad you feel that way, however I am most glad that you have taken the time to measure how much greedier I am. What are you a five years old? Does your mom know that you are on this late at night?
Side with the record company and no one wins.
Can't believe I wasted my time replying to your message, but oh well I guess it had t be done.
"Entertain the Brutes"
At the rate the music industry is going, it seems like soon they're just going to implement your "RIAA fee" in your taxes.
"In a Democracy, people get the kind of government they deserve." -Winston Churchill
Not that I like the behaviour of the RIAA or don't think that the whole business could be arranged much better, but the "I want everything for free!" faction IS hurting the artists, IS acting purely out of greed and quite pathetic with their oft-repeated flawed justifications.
The illegal we do immediately. The unconstitutional takes a little longer.
--Henry Kissinger
Hey man, I fell into a trap by answering your post last night. Not his time bud. Have fun and flame elsewhere!
"Entertain the Brutes"
If you side with RIAA realize that you are siding with an empire that has STOLEN individual artists rights to their own art, work, creation, or whatever you want to call it.
really? did that happen between the legal contract that was signed with the artists and the music that is recorded, produced, and promoted through their studios?
In regards to the greedy part, glad you feel that way, however I am most glad that you have taken the time to measure how much greedier I am. What are you a five years old? Does your mom know that you are on this late at night?
great way to defend your statement. Insults will get you nowhere.
Side with the record company and no one wins
Are the record companies breaking the law? yes
Are they passing Unfair laws to which I am against? yes
Do I feel they should have their intellectual property rights taken away? no.
I replied this to someone else who I thought was you: "Hey man, I fell into a trap by answering your post last night. Not this time bud. Have fun and flame elsewhere!"
Well, take what is yours!
I replied this to someone else who I thought was you: "Hey man, I fell into a trap by answering your post last night. Not this time bud. Have fun and flame elsewhere!"
Well, take what is yours!
I know, I saw it.
Does that mean you're admitting im right?
heh.
Whatever helps you sleep at night man!