SAN FRANCISCO (AP) — Internet music company Liquid Audio may sell or liquidate its assets now that its board of directors has voted unanimously in favor of a $57 million stockholder cash payout, the company's chief executive confirmed Monday.
Under the approved cash distribution, shareholders of record on Tuesday will receive $2.50 per share on Dec. 20, the company announced Friday. Liquid Audio makes software and provides a proprietary method for delivering music over the Internet.
Liquid Audio's chief executive, Ray Doig, said the dissolution of cash does not mean that any immediate changes will occur at the company and the digital music services it provides will continue — at least for the near future. Doig said he would like to sell the company as a whole rather than merely shed portions of its assets to the highest bidder.
"I would prefer a retail sale of the company for the highest value we could get for our shareholders," Doig said.
"Until we have a clear path as which way is best to go for the shareholders, it's business as usual," he said. "We're not under any financial pressure to turn the lights off."
But the lights have certainly dimmed for Liquid Audio in the last tumultuous year. After the latest failed mergers last month, the company's co-founders, Gerry Kearby and Robert Flynn, both resigned. And following a spate of recent layoffs the company has only about 30 employees remaining.
Liquid Audio sued two dissident shareholders, including MM Companies Inc., for allegedly violating federal securities laws in their efforts to block the online music company's planned merger with media distributor Alliance Entertainment Corp.
The merger died last month and two MM Companies executives now sit on Liquid Audio's board of directors.
Liquid Audio's suit against MM Companies has been dropped, Doig said.
Jupiter Research analyst Lee Black says Liquid Audio, though limping, may still have some appeal as an Internet music provider.
"They've still got some business relations out there that could be worth something to someone," Black said. "They're a player and a distributor of digital downloads. It depends on who is going to see value in that. Are they done as a company? Maybe. Are they done as a brand? Maybe not."
Black said Liquid Audio didn't have enough top shelf music content early enough to lure people away from the unprotected and wildly popular MP3 format. As legitimate online music services struggle for attention, free MP3 music files continue to rule on the Internet.
"The business and the consumers moved in a direction that didn't tend to take Liquid Audio with it," Black said.
Shares of Liquid Audio fell 2 cents Monday to close at $2.76 on the Nasdaq Stock Market.
Napster Goods Go on Auction Block
SAN FRANCISCO (AP) — Computers, laptops and a slew of T-shirts with a grinning cartoon cat logo will go up for auction as the now defunct song-swap company Napster cleans out its remaining physical assets.
The smattering of tech goodies represents all that's left of the company dreamed up by a few college students, primarily Shawn Fanning. The company crashed and burned, but gave birth to an online song-swap revolution.
Santa Clara-based software maker Roxio bought the brand name and intellectual property after Napster's bankruptcy. The leftover computer parts, laptops and Napster-logo trinkets are up for grabs at Wednesday's auction.
Available for purchase on the cheap are pallets of monitors and servers that were once used as the company amassed tens of millions of users looking to trade music for free online.
A federal judge ordered Napster offline last year until it could comply with an order to halt the unauthorized trade of copyright music. Napster never met that legal challenge and has remained offline ever since.
Napster filed for bankruptcy earlier this year, and Roxio says it may launch some form of renewed service under the brand name in the near future.
Since Napster fell off the map, other free online music trading services have taken its place, including Kazaa and Gnutella networks. The music industry has tried to counter with its subscription services, pressplay and MusicNet, but they've failed to attract anywhere near the audience the free services have.
Analysts say the subscription services have fewer than 500,000 users combined, whereas Kazaa has about 3.5 million users online at any given time.
EIDC President Ready to Move On
LOS ANGELES (AP) — The head of the embattled Entertainment Industry Development Corp. said he's looking to move on.
EIDC President Cody Cluff is under investigation by the Los Angeles County district attorney's Office for suspected misuse of agency funds. The film agency's executive committee placed him on paid leave earlier this month, but he refused to step down until an executive committee audit.
"Clearly it's time the organization grew beyond Cody Cluff, and clearly it's time Cody Cluff went forward as well," Cluff said last week in an interview with the Daily News of Los Angeles.
The EIDC is in charge of attracting movie and TV production to Southern California.
The district attorney is investigating the agency's practice of giving thousands of dollars to the political campaigns of some board members and of spending large amounts on entertainment.
Cluff said he wants to spare his staff, the EIDC executive committee and himself any more pain.
"EIDC needs a way to move on; I need a way to move on," he said.
WEA Distribution Relocates To NYC
Effectively January 1, 2003, Warner Music Group's distribution company is relocating its headquarters from Burbank, CA to New York City.
"When WEA was formed in 1971, it was a paradigm for all distribution companies, based on its unique structure and its approach to distributing music," WEA CEO Jim Caparro said. "However, significant changes in the industry require us to reposition the organization to take advantage of the rapidly evolving market and approach the business of distributing and marketing music and related product with fresh eyes. While the restructuring necessitates some painful changes, these are crucial in strengthening the organization and enabling us to continue to uphold WEA's longstanding tradition of excellence."
The restructuring will include the transition of 10 branch offices to four regional offices, based in Atlanta, Los Angeles, Minneapolis and New York. These changes are in response to a shift in WEA's customer base.
As a result of the restructuring, approximately 50 positions will be relocated to WEA's new headquarters in New York City. A number of employees currently in those positions will be offered the opportunity to relocate to the new headquarters and all employees who so choose will be offered assistance in job placement, within Warner Music Group, AOL Time Warner and with outside companies.
Oldies Artists Settle Pension Suit
LOS ANGELES (AP) — A group of oldies musicians has reached a settlement with their union that they say failed to give them benefits in their later years.
The settlement will help musicians like Sam Moore of Sam and Dave and the estates of Mary Wells, Jackie Wilson and Curtis Mayfield. They had claimed they had lost money when record companies failed to accurately report royalty earnings and did not make required contributions to a pension fund.
They had filed suit in 1993 against the pension arm of the American Federation of Television and Radio Artists. Under the settlement, the plaintiffs will be paid $25,000 and will be able to file claims and challenge benefit determinations in court.
Joyce Moore, Sam Moore's wife, says her husband must tour just to pay his medical bills, and this is a victory for artists.