Napster in negotiations with Google to strike an Alliance

Napster Shares of digital music service Napster Inc. surged more than 30 percent in premarket trading on a report that it was in talks with internet giant Google for a coalition that could include a sale.

According to a report in the New York Post, Google is in discussions with Napster over an “extensive alliance” that could include an “outright acquisition.”

The company in January told Reuters that it was not on the block. “The company is not looking to be sold; the management is not looking to step out. It’s simply not true,” a Napster spokesman said on January 23.

Napster, founded by college student Shawn Fanning and was once synonymous with the pirating of music, laid off 10 managers last week.

Around 355 online music sellers exist globally, according to a report by the International Federation of the Phonographic Industry, with a shakeout in the industry largely expected, digital music industry executives have said.

The NY Post reported, Google has been in negotiations with Napster to offer a digital music service, rather than start one on its own.

Napster shares rose $1, or 32.05 percent, to $4.12 in premarket trading, from a close of $3.12 on the Nasdaq on Monday.

On the other hand, Google shares rose 75 cents to $427.57 in premarket trading from a close Monday of $426.82 on the Nasdaq.