Report: Google in Talks with Napster

Despite assurances from Napster that it is not for sale, the New York Post on Tuesday cited anonymous sources who said that the music service was in talks with Google for an "extensive alliance," which would possibly include an "outright acquisition."

Talk of a possible sale first surfaced mid-month when Web log Digital Music News reported that Napster layoffs were imminent and executives were looking at exit options. The company did layoff ten managers as part of restructuring last week, but it took time when making the announcement to refute the rumors.

"Rumors of major or significant layoffs were misleading and greatly exaggerated, and efforts to sell the company are patently untrue," the company said in a statement at the time.

The Post reports that Google seems to be leaning toward offering a subscription music service, which the company views as the future of the digital music business. The search engine recently launched its own video service, however it has since been met with a cool reception from both analysts and consumers.

While Napster may be one of the higher profile music download sites, and a sale of the company may be surprising to some, analysts say that it would not necessarily be unexpected. With over 350 music services currently in existence worldwide, a shakeout in the industry is inevitable.

Apple's iTunes controls over 80 percent of the market, leaving competitors to fight over the remainder. With so many services available, it is becoming increasingly more difficult for these companies to make any kind of considerable profit.

Neither Napster nor Google were commenting on the report.