NAPSTER, LABEL TALKS PROGRESSING
Napster is close to reaching an agreement to use music from three of the five major record companies for its proposed pay service, people close to the situation told The New York Times.
Under terms of the proposed deal, the two other record companies in the mix—Warner Music Group and EMI—would retain the right to cancel any arrangement if Napster fails to meet certain security standards. The deal is being negotiated between Napster and MusicNet, the online distribution unit created by AOL Time Warner, BMG, EMI and RealNetworks (hitsdailydouble.com, 4/6) scheduled to be in operation by late summer.
Other sources have told hitsdailydouble.com that such licensing deals were still only in the discussion stage and no agreements, other than those with investor Bertelsmann’s BMG, are yet in place.
Terms of these proposed agreements remain unclear and some obstacles remained to be worked out as of Monday (6/4) night, the Times reports. The deals would not affect a lawsuit the music industry filed accusing Napster of abetting copyright infringement, nor would it alter a preliminary injunction crippling Napster's service by forcing it to block traffic in copyrighted songs, the article said.
Even so, the deals under discussion would be Napster's biggest step yet toward transforming itself into a profitable business and the strongest indication since the court injunction in early March that Napster may survive in some form.
According to the people close to the talks, Napster would agree to license music for a period exclusively from MusicNet, a partnership formed by the three record companies and RealNetworks.
This agreement would help to establish RealNetworks technology and the MusicNet system as the predominant format for distributing music over the Internet by providing access to some of Napster's more than 70 million users.
The Times says Napster would be precluded at least for the time being from licensing music and technology from rival online music venture Duet, which is being formed by Sony and Vivendi Universal (hitsdailydouble.com, 2/22).
MusicNet's partners are seeking to persuade Sony and Vivendi Universal to join them in licensing their music through MusicNet.
