DoveBid to Sell Napster Assets

A webcast auction will finally end the Napster era as Roxio has purchased the company's intellectual property without buying its legal liabilities.

by Gretchen Hyman of internetnews.com [November 22, 2002]

For diehard Napster fans, December 11 could mean more than just one more day in the Christmas countdown.

Auctioneer DoveBid will host a webcast auction of Napster's remaining fixed assets at the Marriott hotel in Santa Clara, Calif., and bring to a conclusion the seemingly endless travails of the world's most controversial file-swapping music service.

Items for sale include all fixed assets that online music company Roxio plans not to buy earlier this month when it set its sights on Napster's technology patents and intellectual property for $5.3 million. Roxio, however, did not assume any of Napster's legendary liabilities related to previous litigation.

The DoveBid/Napster auction will feature furniture, IT equipment, phone systems, televisions, computers, and Napster memorabilia including hats, jackets, and t-shirts with the Napster logo. Computer equipment up for auction includes desktops, laptops, monitors, and printers by Apple, Dell, and Hewlett-Packard.

After many fits and starts, Redwood City, Calif.-based Napster filed for Chapter 11 in June, 2002, after failing to regain its footing when German media conglomerate Bertelsmann AG aligned itself with the defunct file-swapping service with the intention of turning it into a legitimate music subscription service through licensing deals with the major record labels—a plan that never got off the ground.

Prior to Bertelsmann's acquisition of Napster, the music service had been shut down by the courts at the behest of members of the Recording Industry Association of America (RIAA) for propagating the illegal use of copyrighted material over the Internet.

As legal bills soared and the price tag for reviving the music service reached upwards of $85 million for Bertelsmann, Napster's peer-to-peer technology ended up on the auction block in August of this year.

In a surprising turn of events, Bertelsmann, the likeliest bidder for the defunct music service, was locked out of the bidding by a Delaware bankruptcy court for failing to prove that its investment in Napster was made in good faith.

Napster was forced to liquidate, and Roxio, known for its CD-burning software, beat out a bid from pornography company Private Media Group and walked away with the goods.

However, the purchase of Napster's intellectual assets is still pending final approval from the U.S. bankruptcy court and will be determined on November 27. Roxio has been quoted as saying that it will not reveal its plans for Napster's technology until after the purchase is confirmed.

A catalog of Napster items for sale next month is available at dovebid.com. There will also be a sneak preview of auction items on December 10 at the Marriott hotel in Santa Clara, Calif.

Bidders can bid electronically, submit a proxy bid prior to the auction date, or secure a bidder number at the actual auction site, according to DoveBid.

DoveBid has handled product and liquidation auctions for companies such as Agilent Technologies, Alcatel, Enron, Excite@home, Sierra Wireless, Lucent Technologies, Tyco Telecommunications, and Compaq prior to its merger with Hewlett-Packard.

The Napster webcast will begin at 9:00 a.m. Pacific Standard Time on December 11, 2002.

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