Nitin Govil on 31 Jan 2001 06:50:28 -0000

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<nettime> Napster subscription service

January 29, 2001=20
Napster to Start Charging
Filed at 8:02 p.m. ET

DAVOS, Switzerland (AP) -- Internet music business Napster Inc. plans to
start charging subscription fees by June or July this year, Bertelsmann =
AG chairman Thomas Middelhoff said Monday.

``We carried out market research among 20,000 Napster users. The
willingness to pay is given,'' the head of the Germany media company said
during the World Economic Forum in Davos

Bertelsmann, parent of the BMG music unit, signed a watershed cooperation
deal with Napster in October. It's trying to bring the = Internet music
site together with other players in the industry in an effort to
legitimatize the popular Web site.

Earlier this month, independent record label TVT Records announced it was
dropping its lawsuit against Napster, becoming the second such record
label to do so after Bertelsmann itself.

However, much of the world's recording industry remains at loggerheads
with Napster, a Web site that allows registered users to swap music files
free of charge.

The industry says the Napster model is a breach of copyright and results
in a loss of royalties for the artists and the recording companies.

By changing to subscriptions, however, Napster runs the risk of losing its
users to other online companies that continue to provide music exchange at
no charge.

Napster is in talks to enlist other record companies, including the four
other majors Sony, EMI Group, Warner Music and Universal.

The Redwood, Calif.-based Napster claims millions of users, including 1.6
million users online at any one time.

Analyst Eric Scheirer of Cambridge, Mass.- based Forrester Research said
the plan had potential, but a few things need to be worked out first.

``There are people that are ready to pay out there,'' Scheirer said.
However, he said Bertelsmann would need to offer more than simply BMG
artist content to convert Napster users to a paid service solution. Titles
from all labels would need to be included among the selections to make the
endeavor a success.

``Music fans really want the opportunity to choose from the entire body of
recorded music,'' Scheirer said. ``If we want to raise the price we're
going to have to raise the opportunity.''

A Napster spokeswoman said the company has not set a definitive date for
beginning to offer the new membership-based service.

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