However, there is no sign that the other four major recording
companies suing Napster will follow BMG’s example, although both
Napster and Bertelsmann said they will seek support from others in
the music industry to establish Napster “as a widely accepted
membership-based service and invite them to participate actively in
this process.”
All parties in the legal action are awaiting an appeal court’s
decision on whether or not the site should be shut down for
contributory copyright infringement.
The BMG lawsuit will not be withdrawn until Napster successfully
implements the subscription-based service at which time BMG will
make its full music catalogue available to subscribers. In
addition, Bertelsmann’s new e-commerce group, BeCG, will provide a
loan to Napster to enable development of the new service and it
will hold a warrant to acquire a portion of Napster's equity.
Andreas Schmidt, President and CEO of BeCG, said:
"For recording artists and songwriters, we
hope to realise Napster's full potential as a promotional vehicle
while protecting their interests. For the recording industry, we
are looking to take a positive and forward-looking approach with a
membership-based service that complements other forms of music
distribution."
Shawn Fanning, founder of Napster, added: "I am excited that
Bertelsmann appreciates and values the uniqueness of the community
Napster users have built.” Napster claims to have a community of 38
million users.
Hilary Rosen, President of the Recording Industry Association of
America which has been representing the record companies in their
action against Napster, said:
“Today’s announcement does not bring an end
to the court case. There are multiple plaintiffs in addition to
BMG; and BMG itself has said that it won’t withdraw its complaint
against Napster until they actually implement a legitimate business
model. And frankly, it is important for everyone – Napster included
– that the ground rules of the Internet music business be
established once and for all. The courts need to make clear that,
contrary to what Napster has been claiming, companies like Napster
do need to get permission before they launch businesses built on
other people’s creative property.”
