TVT Drops Suit Against Napster

Label, first to fully settle copyright-infringement claims against file-sharing service, cites developing subscription model in decision.

TVT Records, home to Sevendust, 2Gether and Guided by Voices, has dropped its copyright infringement claims against Napster, becoming the first record label to fully settle with the controversial free file-sharing service.

In a statement released by both companies Thursday (January 25), TVT said its decision to end the lawsuit is based on the new service Napster is developing under its strategic alliance with Bertelsmann AG, parent of BMG Music, that upholds the Napster experience while also providing payments to rights holders, including artists, songwriters, recording companies and music publishers.

"The future Napster offers the opportunity to reach music fans in unprecedented and as yet unimagined ways," TVT president and founder Steve Gottlieb said in the statement. "Word-of-mouth has always been critical to breaking our artists — now we have harnessed the power of the fastest growing 'word-of-Net' vehicle in existence. It is high time that the industry embraces a service that the public has so emphatically said they

want."

Under the new agreement, TVT will drop the lawsuit it filed last June seeking an estimated $1.5 billion for copyright infringement of 10,000 songs and allow its master recordings to be used for song-swapping on Napster. TVT will also promote the new Napster business model and Gottlieb will act as adviser to the company in their continuing effort to address concerns of artists and their record companies. Financial terms of the settlement were not disclosed.

"Moving this conversation from the courtroom to the boardroom helps us advance file-sharing as a benefit to artists and songwriters as well as music fans," Napster CEO Hank Barry said. "This new arrangement is further evidence that the alliance we developed with Bertelsmann is the right direction for the industry to take."

Napster and Bertelsmann announced their alliance last fall and are developing a membership-based service that will provide the Napster community with high-quality file-sharing. Although they have encouraged other labels to unite in the alliance, only Edel Music of Germany has joined.

Bertelsmann will not drop its lawsuit against Napster until the new service is launched, and Barry told Reuters he could not predict when that will be.

Napster, a free downloadable program developed by college student Shawn Fanning just more than a year ago, struck a chord with music fans last year and now has more than 45 million users, according to Reuters. The service also brought copyright issues to the center of the music industry and resulted in infringement lawsuits brought on by Metallica, Dr. Dre and all five major record label conglomerates.

TVT, which has released the soundtracks for "Snatch," "Traffic" and "Miss Congeniality" in recent weeks, is considered a pioneer in the digital music field. The label currently offers its entire catalog of music as free timed-out digital downloads on its Web site.

For complete digital music coverage, check out the Digital Music Reports.