The once-dominant file-sharing service created by teenager Shawn Fanning has been off-line since July 2001. While Napster is still facing the lawsuits that forced that shutdown, which date back to December 1999, the bankruptcy protection puts them on hold. Its company opponents can, however, make a claim before the Delaware bankruptcy court, which must now decide how Napster should best settle the claims against it.
Napster’s creditors include The Association of Independent Music of London, which represents around 700 UK indie labels, at $3.79 million, and the law firm of Boies, Schiller & Flexner, which is owes $2.14 million.
Bertelsmann is expected to struggle to see a return on its investment. It plans to re-launch Napster as a fee-based music service. However, to date, fee-based internet music services have been unpopular compared to free P2P alternatives, most notably KaZaA, which appears to have more users now than Napster had at its peak of popularity.
A current record industry lawsuit against P2P service MusicCity is about to be extended to include Sharman Networks, owner of the KaZaA service, according to the Recording Industry Association of America. However, because KaZaA is a decentralised service, it is believed to be impossible to shutdown, even if Sharman Networks is put out of business.