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NAPSTER, PUBLISHERS BURY THE HATCHET
Proposed Settlement of Songwriters/Publishers Class Action to Go Before Judge

Once-defiant, now-dormant online file-sharing service Napster has reached a preliminary agreement with the songwriters and music publishers currently suing it in federal court. The deal must be approved by the court, plaintiffs in the class-action suit and the National Music Publishers Association. That will clear the way for Napster to launch a new pay-version of its service, which would compensate artists, songwriters and labels.

As part of the proposed settlement, Napster will pay copyright owners a total of $26 million in damages for past infringement. As it continues to recast itself as an industry-friendly service, the swappery will also peel $10 million as an advance against future royalties under a structure based on the Audio Home Recording Act, which allocates royalties to songwriters/publishers and owners of sound-recording copyrights in a one-third to two-thirds ratio. NMPA licensing subsidiary the Harry Fox Agency will collect and distribute royalties and monitor compliance.

Napster, along with major-label-backed online music subscription services MusicNet and Pressplay, intends to launch later this year, and will separately offer content from MusicNet, a joint project of AOLTW, BMG, EMI and Real Networks.

"We are pleased to have secured such an important element in creating our new service, one that will benefit songwriters, artists and consumers alike," said Napster CEO Konrad Hilbers. "This landmark agreement is a huge steppingstone toward building a digital music marketplace. Of course, we're making everyone pay in deutschmarks."

The pioneering free file-sharing service has been offline since July by order of U.S. District Judge Marilyn Hall Patel. In that time, much of Napster’s user base has migrated elsewhere for online music, although, according to Jupiter Media Metrix, the Napster website still drew almost 10 million visitors during the month of August. In October of last year, Napster received a $60 million investment from Bertelsmann, which also donated a chief executive when former Bertelsmann Chief Administrative Officer Konrad Hilbers accepted the challenge in July.

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