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The BBC's Patrick O'Connell
"It means Napster for a fee"
 real 56k

Wednesday, 6 June, 2001, 16:59 GMT 17:59 UK
Napster signs deal with music industry
Shawn Fanning and Hank Barry
Coming in from the cold: Napster's founder and chief executive
The online song-swapping service Napster will become a distributor for the online music service, MusicNet, in a controversial deal with three major record labels.

The deal amounts to the signing of a truce with the companies Napster has battled against in the court room - AOL Time Warner and EMI group.

The third recording company, Bertelsmann's BMG Entertainment, dropped a lawsuit against Napster last October in favour of an alliance.

Rock fans at concert in Germany
Millions of music fans will get access to MusicNet via Napster
MusicNet, a joint venture between the three record companies, is a music streaming and download service, set to launch later this year.

Clinching a deal

Napster will be one of MusicNet's three distribution partners, alongside internet service provider America Online and software company RealNetworks.

"We are pleased to be able to offer Napster members access to the MusicNet service," said Napster chief executive Hank Barry.

MusicNet's web-based subscription service will let music fans listen to songs on the internet, but it will not be free like Napster used to be.

"Today's announcement is great for consumers, for artists and for the recording industry," said MusicNet interim chief executive Rob Glaser.

The deal was clinched less than three months after Napster was forced to abandon its free online song-swapping service after a US court ordered it to ban copyrighted music from its service.

Transforming Napster

As one of its distributors, Napster will offer its 70 million members access to record label content.

Napster logo
Napster will be one of three distributors
The deal could transform Napster into a legal subscription-based service, which pays royalties for the songs it distributes.

Napster is currently in the process of filtering out banned songs from its song-swapping service.

Prior to the court order, Napster had been extremely popular as it allowed people to access online all the music they wanted for free.

Court order

In the months since the court order, there has been considerable acrimony over Napster's rate of progress in removing copyrighted songs.

The Record Industry Association of America, which represents the record companies, has accused Napster of failing to comply with the court order.

In April, a Californian judge threatened to order the immediate closure of Napster if it did not find a more effective filtering system.

Napster is due to attend a "compliance hearing" on Wednesday to determine if it has further complied with the judge's order.

The MusicNet distribution deal is believed to have grown out of attempts by Napster and its record label opponents to hammer out a settlement.

Racing online

The alliance between Napster and the three record companies turns up the pressure in an industry hurrying to exploit the popularity of online music distribution.

However, the deal has raised some questions about the ease of acquiring publishing rights to the songs.

Though it may be technically and legally possible to place a wide range of the majors' recording masters on the internet, Napster and the record companies will still have to clear each and every song copyright with song publishers.

Sony Music and Vivendi Universal have recently set up their own rival music-subscription service, called Duet.

MusicNet's partners are rumoured to be talking to Sony and Vivendi to licence their music.

Napster is also talking with Microsoft to help it create a fee-charging service that pays royalties to artists and record labels.

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See also:

06 Jun 01 | Business
Victory for music giants?
04 May 01 | Business
Napster in Microsoft talks
26 Apr 01 | Business
Napster use slumps after court order
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Yahoo joins online music venture
03 Apr 01 | Americas
Napster rallies its troops
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Music giants form Napster rival
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Napster faces new legal challenge
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Music firms rival Napster
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