Napster Strikes Deal With Three Major Record Companies

BMG, EMI, Warner Bros. will provide music to Napster users for a fee.

Napster and the music industry came one step closer to ending their long war on Tuesday, as Napster announced plans to license music from three of the five major label record companies for its upcoming subscription service.

The new service, due this summer, is now scheduled to provide music from BMG Entertainment, EMI Recorded Music and Warner Music Group, whose rosters include such high-profile artists as Christina Aguilera, the Red Hot Chili Peppers, the Beatles and Madonna.

Napster plans to license the music through MusicNet, the joint venture formed by the three record companies in April in order to make their music available online (see "Labels Announce Joint Venture To License Music").

When the subscription service launches, users who pay Napster's regular subscription fee — previously estimated at $4.95 a month — will not get access to major-label content and will be limited to trading indie-label music, CEO Hank Barry said in a press conference Tuesday evening (June 5).

In order to get MusicNet content — which will apparently be available only from MusicNet's centralized servers, not through Napster's traditional file-sharing methods — users will have to pay an additional monthly fee. That fee is expected to be around the cost of a single CD, MusicNet CEO Rob Glaser said. MusicNet will provide both streaming and downloadable music, but only in a yet-to-be-specified secure format, not as MP3s.

In statements that cast some doubt on MusicNet's deal with Napster, EMI and Warner both said Tuesday they would not make their music available to Napster unless they were satisfied with the new service's copyright-protection measures.

But Barry said that he was certain that the record companies will be pleased. "This will not be an issue," he said.

However precarious, Napster's deal with MusicNet is exclusive, Barry said. That means that the other two major label groups, Sony and Universal — who have a competing online-distribution venture called Duet — would have to join MusicNet if they want to provide their music through Napster.

Glaser said the deal is a major step toward an orderly online music market.

"What we're trying to do is go from the chaos and the confusion and contentiousness of the way this market's been, to a market where the consumer can get what they want, which is a great consumer experience, and artists and rights holders get what they want," he said.

The five major label groups and other parties still are pursuing a copyright infringement lawsuit against Napster, which led a judge to order the service to block songs cited by rights-holders.

The number of downloads on Napster has fallen by 87 percent since March, when the service began blocking songs, according to a just-released study by the digital-entertainment research firm Webnoize.

MusicNet has also licensed its service — set for a late-summer launch — to America Online and to the online-music company RealNetworks, its co-owner.

(For complete coverage of the Napster saga, check out MTV News' "Napster Files.")