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"We intend to continue our licensing negotiations with the majors, but the negotiations are taking longer than anticipated."
——Konrad Hilbers, CEO of Napster

NAPSTER CUTS

Song Swapper Lays Off 10% of Work Force

Napster said it has laid off almost 10% of its work force to cut costs as the company works to launch a version of its music-sharing service.

The company said the cuts would leave it with just over 100 employees, the Wall Street Journal said.

The service has been inactive since last year as the company fought a long-running copyright lawsuit filed against it by the recording industry, leaving Napster without any significant sources of revenue.

Napster has long planned to open a new version of the service that charges consumers a fee and respects record label copyright, but the new service has been delayed as the company sought to reach music licensing agreements with the major record labels. Napster last year reached a licensing agreement with MusicNet, a joint venture that Warner, EMI and BMG are participating in, but Napster has since successfully argued in court that MusicNet's terms are too restrictive. The company is now in direct discussions with the major labels.

"We intend to continue our licensing negotiations with the majors, but the negotiations are taking longer than anticipated," Napster CEO Konrad Hilbers said in a statement. "In order to see this through the long haul we needed to make moderate and temporary staffing reductions, which resulted in a 10% cut. We intend to fill these positions once we are closer to launch."

Napster representatives wouldn't discuss how much money the company has left, but Hilbers said that Bertelsmann, which has funded the company during the past year, "will remain committed to the new Napster service and will continue to fund us accordingly through launch."

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