Internet file-sharing pioneer Napster has filed for bankruptcy as music industry heavyweight Bertelsmann AG follows through on a plan to take over what is left of the company.
The Internet music-swapping service has agreed to sell its assets to Bertelsmann for $8 million in cash and the assumption of certain liabilities, according to papers filed in a Delaware court.
The liabilities include any new loans to Napster and forgiveness of the $91m Bertelsmann loaned Napster before the filing, Napster's bankruptcy lawyer Mr Rick Cieri said.
After the bankruptcy process is complete, Napster will sell itself to Bertelsmann, unless another company submits a higher bid, Cieri said.
"The Chapter 11 (bankruptcy protection) process is going to be utilised to maximise the value of Napster, whether by a sale to Bertelsmann or someone else," Mr Cieri said.
At its peak, Napster boasted 60 million users and seemed at once to symbolise both the excitement of the digital revolution and the worst nightmares of the established recording industry.