Google denies a report that the Internet search giant is in talks with Napster.
The New York Post reported that Google is considering an extensive alliance with Napster Inc., leading shares of the digital music service to fall back from gains of as much as 60 percent or perhaps the acquisition of the company, but a Google spokeswoman says, “It is a rumor. It is a fabrication. There isn’t any truth in it."
Napster, which used to be synonymous with the pirating of music but is now a legal music service, claims about 500,000 subscribers, making it a distant No. 3 to dominant music service Apple iTunes and RealNetworks’ Rhapsody. It had a net loss of US$13.6 million ($20.2 million) in its September quarter.
The New York Post, citing anonymous sources, said the Web search leader was mulling an extensive alliance with Napster, which could include an "outright acquisition" of the subscription music service.
Google recently introduced a music-search feature that gives Web surfers faster access to music-related information.
Google says in an e-mailed statement that "We have no plans to acquire Napster, nor do we have plans to develop a music store at this time," Google spokeswoman Sonya Boralv said in a statement.
Napster has declined comment.
She noted that Google had recently introduced a music search feature that offers users faster access to music-related information they are seeking. Google also displays links to music sites where users can buy music directly, she said.
Lynn Fox, a spokesman at Google’s Mountain View, California, headquarters, declined to comment further. A UK-based spokesman for Napster also declined to comment.
Napster shares, normally thinly traded, surged to a high of US$4.95 on a New York Post report of a possible deal with Google. After the Google denial, the shares fell back to US$3.68, up 56 cents, or 18 per cent, in heavy Nasdaq trading that was more than 60 times its average daily volume.
Shares of Google, set to report fourth-quarter results later on trading, were up 2.5 per cent to US$437.50.
The New York Post cited a recent research report from brokerage Bear Stearns, which argued that Google was in the midst of creating an iTunes competitor and could introduce its own music service in the next three to six months.
With a total market capitalization of $136 million, the value of Napster is nearly 1,000 times less than that of Google.
Last week, Napster officials told Reuters the company was not on the auction block. "The company is not looking to be sold; the management is not looking to step out. It is simply not true," a Napster spokesman said at a music conference.
Gartner Inc. analyst Michael McGuire questioned why Google, which has introduced a string of new services in recent months, including an online video store, would bother to buy Napster instead of creating its own music service.
I’m not sure what Google would get out of it. Napster may have the brand name, but that brand name recognition isn’t converting to dollars, the digital media analyst said.
Napster, founded by college student Shawn Fanning, was once a wildly popular renegade music service. It now sells legal subscription services and remains one of the most recognized brands in the music business.
Apple’s iTunes store, which sells songs for 99 cents each, has sold 850 million songs, the company reported earlier this month. RealNetworks counted 1.3 million paying music subscribers for Rhapsody and its other music services at the end of September, spokesman Matt Graves said.