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The opera singer, who won the first series of Britain's Got Talent, will part ways with the company despite his debut album selling 3.5 million copies according to the News of the World.
A source said: "Simon thinks the game's up for Paul. They no longer saw eye to eye on everything and parted ways."
An industry insider added: "As soon as Susan Boyle came along it was bound to be curtains for Paul. SuBo captured the world's imagination and it was hard to compete."
Potts has apparently amassed a fortune of £5m.
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