Napster delays relaunch, still looking for deals

LOS ANGELES: Napster, the once high-flying song-swapping service that has

been grounded by legal squabbles, has postponed its planned relaunch, the

company said.

A statement on the Napster Web site said the company is "taking some

more time to make sure we get the very best deals we can" from major music

labels before it reopens for business. Napster had initially hoped to launch the

new service by the end of the first quarter.

The company has not set another relaunch date but its chief executive, Konrad

Hilbers, told FT Deutschland on Wednesday it will not reopen a

copyright-friendly Napster service for another nine months. A Napster

spokeswoman said no specific time frame for relaunch had been set.

The company needs to secure licensing deals from the major record labels

before relaunching. Those negotiations have gone slowly while a lawsuit between

the majors and Napster drags on in the US courts.

In what Napster called a legal victory, US District Judge Marilyn Hall Patel

on Tuesday gave the service nearly 10 months to prove its claim that major

record labels, which have sued it for copyright infringement, have actually

misused copyrights and impeded competition.

"We are pleased that the court has agreed today to grant Napster the

discovery schedule we proposed, allowing a reasonable amount of time for Napster

to obtain and evaluate the extensive discovery material," Napster said in a

statement.

The labels, seeking a summary judgement, had hoped to conclude the case in a

few months. In March 2001 Patel issued an injunction that effectively shut down

Napster. On Monday, a federal appeals court ruled that Napster could not restart

the free service until it could prove it could fully comply with the injunction

barring the trade of all copyrighted music from its service.

The ruling had little practical impact since Napster has shown little

inclination to relaunch the old service, instead focusing on launching a new

secure service to compete with subscription services, backed by major labels,

launched in late 2001. The big recording labels arrayed against Napster include

AOL Time Warner Inc.'s Warner Music, EMI Group Plc , Bertelsmann AG's BMG,

Vivendi Universal's Universal Music, and Sony Music .

Bertelsmann has subsequently become a major investor in Napster and is

working to restart the service. Meanwhile, one of Napster's original investors

sued to oust half of its board of directors, saying the move was needed soon in

light of a pending offer to buy the company.

John Fanning, uncle of Napster inventor Shawn Fanning, filed suit Monday in

Delaware Chancery Court to replace Hank Barry and John Hummer on Napster's

four-member board with two new members, Joseph Amram and Martin Kay.

The lawsuit claims that shareholders voted to change the board on March 24,

but Barry and Hummer disputed the validity of the vote and also disputed

conversion of Napster's preferred stock, which had controlled the votes in the

privately held company, into common stock on March 11.