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Bertelsmann CEO seeks Napster buyout

Chief Executive Thomas Middelhoff confirms that his company wants to extend its investment in the file-swapping service into a complete takeover, according to reports.

Bertelsmann Chief Executive Thomas Middelhoff confirmed Friday that his media conglomerate wants to take over Napster, the struggling file-swapping company it has already supported with tens of millions of dollars, according to a German report.

In an interview with German newspaper Die Welt, Middelhoff said his company plans to buy out other Napster investors. According to reports, Bertelsmann is prepared to spend up to $30 million to buy the company.

"Our solution is to take over Napster completely. We plan to buy out the former owners, most of all venture-capitalist Hummer Winblad Venture Partners and some private investors like John Fanning, who is the uncle of the founder Shawn Fanning," Middelhoff was quoted as saying in Die Welt.

Bertelsmann entered into a strategic alliance with Napster in October 2000, under which the German company gave the song-swapping service financial support to help it through its legal troubles. By September 2001, experts were estimating that Bertelsmann had spent around $100 million supporting Napster.

Rumors of a complete buyout have been circulating for some time. Last week, takeover talks were suspended after John Fanning filed a lawsuit in a Delaware court that seeks to have two of Napster's board members replaced, according to Reuters.

Napster is planning to relaunch itself as a subscription-based site, but this ambition has been hampered by its failure to reach an agreement with the record labels that sued it for copyright infringement. Last month it announced a further round of job cuts, and last week the company put its new paid service indefinitely on hold.

Middelhoff said that despite its ongoing legal battles with the record industry, Napster could become the Internet's most successful music platform ever, according to Die Welt.

Graeme Wearden reported from London. ZDNet Germany's Dietmar Mueller and Reuters contributed to this report