Record labels make online plans

Napster founder Shawn Fanning: The labels want to emulate his success

Major record labels are making the first moves to set up their own online distribution systems to compete with the likes of Napster.

The Record Industry Association of American, the trade body for labels in the US, has asked the country's copyright office to draw up rulemaking procedures for online subscription services.

RIAA president and chief executive Hilary Rosen said: "The recording industry understands the urgent need to bring subscription music services online."

The industry has been criticised for being slow to catch up with the online music revolution, while the five biggest companies - Universal, Bertelsmann, Sony, Warner and EMI - have been suing one of its leading exponents, Napster, for copyright infringement.

Napster deal

Napster - whose program allows users to swap MP3 files located on each others' hard drives - has 40 million users around the world.

Bertlesmann recently broke ranks with the other firms to strike a deal with Napster and turn it into a paid-for, secure service.

So far, the other labels have not accepted its invitation to join a new-look Napster.

Instead, Universal is testing its own subsription service, and is planning to develop another with Sony.

One of the biggest obstacles to developing a subscription service is ensuring that songwriters and music publishers get a fair share of the proceeds.

Hilary Rosen said: "Songwriters and music publishers must benefit from these new opportunities online. We are committed to this principle.

"But if the legitimate industry's efforts to offer consumers the benefits of subscription services are slowed down, piracy will continue to fill the void."

Earlier this week, the RIAA launched a collective, SoundExchange, to distribute royalties from music which is streamed online, such as internet radio.

It also said it was working with music publishers to find a business solution to deal with proceeds from downloaded music.