MIDDELHOFF GETTING OTHERS TO PLAY WITH HIS NEW TOY?

Bertlesmann CEO Thomas Middelhoff says three major label groups have expressed interest in participating in a commercial file-sharing service.

Sources at European music industry trade magazine Fono say both Warner Music Group and EMI Recorded Music are considering joining Napster, while Universal Music Group are interested, but are "dragging their heels." Middelhoff announced a "strategic alliance" with the legally challenged file-sharer last week (see hitsdailydouble, 10/31).

On a London-based conference call, Middelhoff suggested the service could include a three-tiered structure, with a first tier offering a limited supply of free promotional tracks and artist information, a second tier for $4.95 a month and a third tier at $4.95 a month plus per-song fees.

Frank Sarfeld, a Sr. VP at Bertelsmann's Ecommerce Group, said: "The Napster people are using will still exist. You don't want to turn people away."

No information was provided as to when the service would be available, or what file format would be used, but Microsoft's recently introduced next-generation Windows Media player will undoubtedly be a major force.

Middelhoff also reiterated that the departures of BMG Entertainment founder Michael Dorneman and CEO Strauss Zelnick (see hitsdailydouble, 11/5) had nothing to do with disagreements about the Napster alliance. He also reiterated his vow to make BMG the world's top music company, through e-commerce, streaming and digital rights management.

Napster is currently waiting for a decision from the Ninth Circuit Court of Appeals in San Francisco about whether it can continue operating pending a trial.