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A brave Napster is willing to keep pounding away at the unprofitable online music market. Er, unless someone wants to buy the company.

Napster today revealed that it has hired UBS Investment Bank to sort through partnership and acquisition proposals for the company. Rumors of such a play first appeared in February, at which time Napster CEO Chris Gorog vehemently denied that the company was seeking a buyer. It would seem that hemorrhaging cash over the past seven months has changed Gorog's - forgive us for this - tune.

Sort of.

"Napster is in a strong position to continue aggressively building our business as an independent company and we are pleased to also have the opportunity to thoughtfully examine potential combinations that may further enhance Napster's unique strategic and brand position in the center of digital media," Gorog said. "Our goal is to enhance shareholder value which could potentially lead to a new strategic partnership or the sale of the company but in any event our primary focus will remain on growing Napster."

In the near-term, Napster's public flirtation with potential suitors has sure done the trick. Shares of Napster surged more than 12 per cent, at the time of this report, to $4.00 in the after-hours markets.

Try as it might, Napster has failed to develop anything resembling a healthy business model since it went "legal" with a music subscription service. The company claims $100m in annual revenue and more than 500,000 subscribers. Such totals haven't been enough for Napster to turn a profit, and the company continues to eat away at its cash stockpile, which is now down to $97m. In its most recent quarter, Napster lost another $10m.

To be fair, most of the subscription players have struggled to find the black. Apple has taken the vast majority of profits in the online music realm via the iPod. Meanwhile, the subscription crowd - and Apple via iTunes - must fight over a few pennies per song in profit.

You have to wonder if Napster's customer base is really worth the effort for a company such as Microsoft or even Real. The Napster brand has all the gravitas of a Che Guevara t-shirt.

You can keep putting lipstick on a dead cat, but it's still a dead cat, as the saying goes.

But in these days of bubbling Web 2.0 jargon and loose venture capital, we're sure some company full of ambition will be willing to take on Napster's business model and college music freeloaders. ®

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