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A U.S. judge Tuesday blocked the sale of Napster's assets to media giant Bertelsmann AG in a move that could nix the best-known music swapping site's attempts to get back up and running.

Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware, in Wilmington, handed down the decision blocking Napster's sale for $8 million to Bertelsmann, the companies confirmed. Napster filed for Chapter 11 bankruptcy protection last June despite Bertelsmann's providing close to $100 million in loans and other financing to the company. Other record labels and music publishers had objected to the sale.

No Future for Napster

"Napster is disappointed with the bankruptcy court's decision not to approve the sale of the company's assets to Bertelsmann," said Konrad Hilbers, chief executive officer of Napster, in a prepared statement.

"As a result of the record companies' and music publishers' opposition, Napster's creditors will be denied substantial repayment and the company will likely be forced into Chapter 7 liquidation. As with most start-up technology businesses, Napster's technology is of little value without the talented team that created it, so it is an occasion of loss on many levels," Hilbers said in the statement.

Bertelsmann Backs Out

Despite Bertelsmann's heavy investment in Napster, officials of the company appeared less frustrated with the judge's decision.

"We accept the court's decision that the sale of Napster's assets to Bertelsmann has been denied and that the purchase will not proceed," the G??tersloh, Germany-based company said in a statement.

Napster has been fighting to bring its music trading service back online since a San Francisco court ordered the company to shut down, mostly because it helped users trade copyright-protected material. Napster once claimed millions of users, many of whom have flocked to new music trading services.

If Napster is shut down and its assets broken up, it will mark the end of an era on the Internet but not the end of music trading, says Mike McGuire, research director at GartnerG2, a division of Gartner.

"One of the early chapters in online music distribution is coming to a close," McGuire says.

A Lasting Effect

Napster gave many users their first taste of free music and built a brand that even its critics in the recording industry desired. However, the warm, fuzzy feelings users once had for Napster faded away as the company tried to move to a subscription-based model under the guidance of Bertelsmann, McGuire says.

"I am not sure what the brand value would be now," he says.

Whether or not Napster returns, the online music world has felt the effects of its presence. The world of free music still thrives despite the recording industry's repeated attempts to shut sites down and even place fake songs on file-trading networks. In addition, Napster demonstrated a popular means of distribution that record labels have since tried to cash in on.

"This is not a bullet in digital music distribution," McGuire says. "There's tons of peer-to-peer networks out there that pop up overnight. The industry will have to come up with its own solution or adopt something that exists and make it legitimate."

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