Updating a story first posted here yesterday, Konrad Hilbers has resigned as the CEO of Napster less than a year after taking the post, and despite a reported buy-out offer on the table from Bertelsma

Updating a story first posted here yesterday, Konrad Hilbers has resigned as the CEO of Napster less than a year after taking the post, and despite a reported buy-out offer on the table from Bertlesmann, the cash-strapped file swapping service is said to be considering filing for bankruptcy, according to sources. Napster has been offline since July 2001 while fighting copyright infringement suits brought against it by the major labels.

Hilbers has been at odds with the company's board of directors in recent months over the future direction of the business. The board is said to be resistant to an acquisition offer from lead investor Bertelsmann -- a deal Hilbers wanted to make.

"I am convinced that not pursuing the offer is a mistake and it will lead the company to a place where I don't want to lead it," Hilbers stated today (May 14) in an internal memo to employees that has been obtained by Billboard.

Another issue said to be complicating matters at Napster is ongoing litigation between John Fanning, uncle of company founder Shawn Fanning, and venture-capital firm Hummer Winblad regarding board membership and allocation of funds.

In a statement, the Napster board said it "deeply regrets" that it has not yet found a "funding solution that would allow Napster to launch a service to benefit artists and consumers alike." While Napster has not yet filed for bankruptcy, it has been trimming its ranks in recent months due to a lack of funds. It says its expects to explore further cost-cutting efforts in the coming week.

In a statement, Bertelsmann said, "We regret that the Napster shareholders were unable to reach an agreement regarding the offer from Bertelsmann, however, we continue to believe in the value of peer to peer technology. We are hopeful that Napster's brand and technology will be able to realize its potential as a compelling consumer proposition."

Napster has indefinitely tabled all plans for the launch of a fee-based service, which has been stalled due to a lack of licensing deals with the major labels.

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