|
Napster joins MusicNet
|
 |
June 5, 2001: 7:37 p.m. ET
Internet-song swapping service joins three labels in joint venture
|
NEW YORK (CNNfn) - Napster, the Internet-based song-swapping service under federal court order to stop copyrighted material from being exchanged through its site, agreed Tuesday to take part in MusicNet.
Napster joins three major record labels to offer their copyrighted titles to users with a new pay version of its music-sharing service.
Under the terms of a tentative agreement, Napster would agree to exclusively license music from the three record companies: AOL Time Warner (AOL: up $1.06 to $53.01, Research, Estimates) 's Warner Music, Bertelsmann's BMG Entertainment and EMI Group. The three companies, in collaboration with Internet media technology provider RealNetworks (RNWK: up $0.11 to $12.55, Research, Estimates) , have formed a joint venture called MusicNet.
"MusicNet is focused on providing a platform that will help consumers who are used to the experience of Napster to find, acquire and enjoy music in a manner that's legal, reliable, secure and supportive of artists and rights holders," MusicNet CEO and Chairman Rob Glaser.
AOL Time Warner is the parent company of CNNfn.
MusicNet is expected to launch its service by late summer.
Although the specific terms of the agreement were not clear Tuesday, sources said such an arrangement would not affect the status of the Recording Industry Association of America's (RIAA) lawsuit against Napster or a federal judge's order that Napster must prevent copyrighted material from being exchanged through its service.
Check on music & entertainment stocks
Napster's service is based on "peer-to-peer" networking technology. Users download and install software from Napster's Web site, which then allows them to share specific files on their hard drives with others and access files on other users' hard drives via the Internet.
The files shared over Napster's service are in a format called MP3, which provides near-CD quality audio and can easily be converted into a format that allows users to copy them onto rewriteable CDs and play them in standard CD players.
Under the tentative deal, sources said Napster would offer two basic forms of service: one in which users would pay a monthly fee and be able to access non-MusicNet titles, such as those of independent artists in the MP3 format; and another under which users would pay an additional fee for access to a premium version based on the RealNetworks audio technology and MusicNet's titles. Under the second service plan, users would not be able to share the titles, which would be located on a central network server.
Rob Glaser, CEO of RealNetworks, said the agreement will breathe new life into the Napster service, which has recently seen a sharp usage decline. (489KB WAV)(489KB AIFF)
For the time being, Napster will not be allowed to license music and technology from a rival online music venture called Duet, which is being formed by the other two large record labels, Sony Corp. (SNE: down $0.35 to $78.35, Research, Estimates) 's Sony Music Entertainment and Vivendi Universal (V: up $0.50 to $64.50, Research, Estimates) 's Universal Music Group.
Its deal with MusicNet is Napster's latest effort to survive in the wake of a court ruling that has resulted in a substantial drop in users of its service. Since its inception, Napster had offered its service free of charge, with no identifiable revenue source.
Last October, Bertelsmann agreed to lend Napster $60 million to convert itself into a fee-collecting subscription service. In exchange for the loan, Bertelsmann received the right to buy a majority ownership stake in Napster. 
|
|
|
|
|
 |
|
