Napster set for comeback

Will music fans still love Napster when fees are charged?

The feud between the music-swapping service Napster and the National Music Publishers' Association (NMPA) could be coming to an end after the two parties hammered out a proposed settlement to their court battle.

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The agreement is not the end for Napster's legal struggles. Law suits from the Recording Industry Association of America and several large music publishers are still ongoing.

The music industry had sued Napster because the firm's software made it possible to swap copyrighted music over the internet without paying royalties to artists and record companies.

The proposed settlement will turn Napster into a fee-paying service, due for launch later this year, through which music publishers would license music to Napster users.

"This will enable Napster to move forward with the launch of its new service, knowing that a growing range of content will be available to consumers," said Napster chief executive Konrad Hilbers.

But as the music-swapping service moves closer towards copyright legitimacy, analysts question whether it will still be popular among music fans all over the world.

"From a consumer's standpoint, this means nothing," said Gartner Dataquest analyst PJ McNealy.

Performance rights

Napster was closed down earlier this year following a court order. The company was allowed to resume its service after installing filter software, which was supposed to bar users from swapping copyrighted music.

However, record companies accused Napster's software filters of not working properly, while the San Francisco-based web firm argued that music firms were unhelpful in compiling lists of copyrighted songs.

But the legal wrangles now appear to be close to a resolution.

Under the NMPA settlement proposal, Napster would pay $26m for all previous unauthorised music that has been swapped using its software, as well as a further $10m in down payment on future royalties.

But the song-swapping service still has to resolve lawsuits brought by major music industry labels, which own artists' performance rights, as opposed to the publishing rights.

Deals must be struck on all these rights before the service can fully get back to business.

Publishing rights

The NMPA deal only covers publishing rights for about 700,000 songs.

Under the deal, publishers and songwriters would get about a third of the payment from Napster with the rest going to the performance rights holders.

The proposed settlement with NMPA needs approval from a judge, the board of directors of the industry organ and from individual publishers.

"We're very pleased we were able to assist each other in breaking new ground in new areas of delivering more product and at a much better rate to our songwriters and creators of American music," said NMPA chief executive Ed Murphy.

The Recording Industry Association of America, which led the push to shut down Napster on behalf of major music labels, said its own talks with Napster were also moving forward.

But some of the labels are in the process of creating their own online distribution websites. They may prefer to earn fees from music fans directly, rather than let Napster earn the fees, even if royalties were paid.