Monday, September 1, 2008

Napster faces proxy contest

Napster ... there's a name redolent of history.

In the speeded-up cyberspatial sense of the word "history" of course.

It began in 1999 as a cool idea in the head of Shawn Fanning. Fanning was 18 years old at the time, and I understand the term "napster" itself was first his hair-related nickname.

He sparked an intense debate over peer-to-peer networks and intellectual property, and redefined the market for music.

Ah, those were the days. Unfortunately, that Napster shut down in July 2001as the result of a court order. The company now known as Napster was formally Roxio Inc., having purchased the original firm's brand and logos at a bankruptcy auction.

Roxio/Napster launched its service, Napster 2.0 in October 2003.

The reborn company's stock price hit a high of $10 in December 2004. But for the subsequent three and a half year, it's been skidding. In early July of this year it was selling for less than $1.25 a share. It has since rebounded a bit. Not much.

Hence, the dissatisfaction of many of its investors, and the present proxy contest. The demands? This from a filing.

"We believe the current classified board structure, the board’s continued support of its poison pill takeover defense, the dilution of shareholder ownership through restricted stock grants for 'performance' and the new 'change of control' severance package awarded to the CEO/chairman have misaligned the interests of the board from those of stockholders. In fact, we believe Napster’s generous senior executive compensation practices overall have created incentives for management NOT to sell the company. It is time for stockholders to exercise owner oversight and force entrenched directors to step aside by casting your vote with us."

Now THERE's a song they've taken from their peers.

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