Napster clears hurdle in fight for life

  • Monday, September 24, 2001 9:00pm
  • Business

Associated Press

SAN JOSE, Calif. — Edging closer to legitimacy, Napster Inc. on Monday tentatively settled a lawsuit filed by music publishers and struck a deal that could lead to legal and fee-based song distribution online.

Under the proposed settlement with the National Music Publishers’ Association, Napster will pay $26 million for past unauthorized use of music and $10 million down payment on future royalties.

The deal also sets up terms under which songwriters and music publishers can license music to Napster’s upcoming fee-based service, which is now expected to be launched by the end of the year.

"This will enable Napster to move forward with the launch of its new service, knowing that a growing range of content will be available to consumers," said Napster chief executive Konrad Hilbers.

But Napster, which has been shut down since early July, still has big hurdles to overcome, including the resolution of lawsuits filed by the major labels that own the performance rights.

The performance and publishing copyright issues must be resolved before a song can be legally distributed on Napster or anywhere else. Monday’s deal covers only the publishing rights of up to 700,000 songs.

Officials were hopeful the agreement could serve as a framework for future settlements.

Under the agreement, a portion of the revenue collected for each song would be reserved for royalty payments. Of that amount, one-third would be paid to the publishers and songwriters, officials said.

The remaining two-thirds would be reserved for holders of the performance rights. Specific terms, such as the size of the overall royalties chunk, were not disclosed.

However, officials said the fractions reserved for songwriters and publishers is significantly larger than what is now paid out.

"We’re very pleased we were able to assist each other in breaking new ground in new areas of delivering more product and at a much better rate to our songwriters and creators of American music," said Ed Murphy, NMPA’s chief executive.

The settlement must be approved by a judge, the board of directors of the NMPA and individual publishers.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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