SAN FRANCISCO, Feb. 21 /PRNewswire/ -- Napster today made public the
business model that it has been presenting to major labels for the last six
months in an effort to settle their dispute and end the industry's effort to
shut Napster down in court.
The proposal would provide guaranteed revenue of $1 billion to the major
labels, songwriters and independent labels and artists over the next five
years. Major labels would receive $150 million per year for a non-exclusive
license, divided according to files transferred. $50 million per year will be
set aside for independent labels and artists to be paid out based on the
volume of files transferred.
"As we have been saying in private meetings with the major recording
companies and the RIAA for the last six months, Napster has a viable business
model with solid revenue streams and we are building the technology to make it
happen," said Hank Barry, CEO of Napster, Inc. "We made public our business
model and technology today in hopes that the recording industry will meet us
at the table to come to a resolution that benefits artists and consumers
"Bertelsmann chose to build a partnership with Napster in October, 2000
because of the tremendous value it creates for promoting artists and building
community," said Andreas Schmidt, president and CEO of Bertelsmann eCommerce
Group. "The revenue potential of Napster for the entire recording industry is
unprecedented and it's time to start thinking towards the future and figure
out a way to leverage this potential instead of trying to quell it. In the
interest of the consumer and artists it's time for the industry to lay down
Napster's CEO Hank Barry described the membership model that will enable
the company to make the proposed payments. Definitive pricing has not been
set, but the model will have two tiers. The model includes a "Basic
Membership" plan that would cost in the range of $2.95 to $4.95 per month with
an as yet undermined limit on file transfers. The "Premium Membership" will
cost between $5.95 and $9.95 and will offer unlimited file transfers.
The company also unveiled key aspects of its rights accounting
architecture and security technology.
The new Napster, slated to launch this summer, will be designed as a
promotional service with fidelity limitations of 128 kbps and lower. Users
will be asked to pay an additional fee in order to burn CDs and to transfer
their music to portable devices. The service will be easy to use, and offer
secure, complete and accurate file transfers, a new player with a personal
jukebox and enhanced search and community features.
"I have so many cool things in development and I want to be able to bring
them to the Napster community," said Shawn Fanning. "I am also grateful for
the outpouring of support from the Napster community, keep it coming!"
Napster is the world's leading person-to-person file sharing community.
Napster provides music enthusiasts with an easy-to-use, high quality service
for discovering new music and communicating their interests with other members
of the Napster community. Napster's software application enables users to
locate and share music files through a user-friendly interface, and features
instant messaging, chat rooms, and Hot List User Bookmarks. Shawn Fanning,
then an eighteen year-old freshman at Boston's Northeastern University,
founded Napster in 1999. In October 2000, Bertelsmann AG and Napster
announced the formation of a strategic alliance to further develop the Napster
person-to-person file sharing service. In January 2001, edel Music and TVT
Records joined the alliance. This year, Napster won several Wired Magazine
Readers Rave Awards, including Best Music Site, Best Innovative Start-up, and
Best Guerilla Marketing.
Bertelsmann eCommerce Group (BeCG), formed in June as a division of
Bertelsmann AG, brings together Bertelsmann's entire portfolio of e-commerce
companies and holdings such as bol.com, BarnesandNoble.com, CDNOW, and BMG
Music Service in order to drive Bertelsmann's global e-content, community and
commerce business. The group's objective is to build the leading global
community and commerce network across all technologies and platforms while
providing an unmatched consumer experience around all forms of media and
entertainment. Through the acquisition of CDNOW and strategic alliances with
AOL, TerraLycos and Napster, Bertelsmann has direct access to some 200 million
customers worldwide. With 32 million unique visitors per month, Bertelsmann
is the global Internet leader among all media companies. BeCG is a subsidiary
of Bertelsmann AG, the world's most international media company with over
76,000 employees in more than 58 countries. Bertelsmann's business units
include publishing firms, music and film companies, multimedia services,
online commerce companies, daily newspapers, consumer magazines, radio and
television stations, book clubs, trade journals, and other service companies
that provide information, education and entertainment to a worldwide audience.