SAN FRANCISCO – Napster Inc., is replacing its leader, Hank Barry, with a German media executive who will try to steer the company out of its renegade past into a legitimate subscription service that requires fans to pay for online music.
Barry, a lawyer who came to Napster from the venture capital firm Hummer Winblad and has served as interim CEO since May 2000, will remain with the company in a reduced role, serving on Napster's board of directors.
His replacement is Konrad Hilbers, a veteran of the German media giant Bertelsmann AG, who most recently served as executive vice president and chief administrative officer of the conglomerate's music arm, BMG Entertainment.
The moves were confirmed by sources inside Napster and Bertelsmann AG, who spoke on condition of anonymity. Bertelsmann became the song-swapping company's primary financial backer last October.
Hilbers inherits a company mired in controversy, looking to resolve copyright infringement lawsuits brought by major record labels. It plans to convert to a subscription music download service later this summer.
Napster's song trading network has been offline since July 2, when its effort to make a quick fix and strengthen its ability to filter out copyright music turned into extended downtime.
U.S. District Judge Marilyn Hall Patel, who crafted the initial injunction that forced Napster to closely police its system for pirated music, told the company to remain offline unless it could offer a foolproof service able to screen out every single unauthorized song.
An appellate court allowed Napster to resume song-swapping last week, but the company has yet to restore service, leaving a dwindling number of Napster users in the dark.
Bertelsmann's partnership with Napster brought with it the promise of digital music downloads from BMG's premium acts, including Grammy winners Christina Aguilera and Carlos Santana.
But the long awaited subscription service from Napster has yet to launch, and impatient music traders have migrated to other file-sharing programs such as Freenet, BearShare and iMesh, where pirated music, movies and other computer files can be found for free.
Unique Internet visits to Napster's Web site declined 36 percent during the past eight weeks ending July 15, according to a study of Napster Web traffic released Monday by Nielsen/NetRatings.
The subscription music service that emerges under Hilbers' leadership will likely bear little resemblance to the music free-for-all that had an estimated 50 million Napster users swapping copyright songs last year.
Meanwhile, Napster's faithful are experimenting with other software to satisfy their file-sharing needs. The Nielsen/NetRatings study noted that alternatives to Napster are gaining popularity.
Visitors to BearShare's Web site jumped 39 percent over the same eight week period; iMesh saw a 29 percent jump over the same period.
"Consumer interest in file-sharing sites is skyrocketing, in light of the recent restrictions placed on Napster. Traffic to Napster is dropping while other file-sharing sites are spiking in traffic," said Jarvis Mak of NetRatings.