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Tuesday, January 30, 2001

Napster could charge fee by summer


Some major music labels might be missing

By Jefferson Graham
USA Today

        The free song-swapping service Napster might begin charging a subscription by June or July, signaling what could become a major shift in the way music is distributed.

        Bertelsmann AG CEO Thomas Middelhoff made the announcement Monday. The entertainment giant is working with Napster on the new service; a $4.95 monthly fee has been mentioned. Napster would not confirm a target date.

        Such a switch would signal a sea change in music on the Inter net — and music delivery, in general — previewing entertainment's subscription-based future.

        Napster has a user base of 57 million, and Mr. Middelhoff says he's confident “the willingness to pay is there.”

        Webnoise, a market research firm, has done studies that show 70 percent of users would pay, but only for the current Napster, where virtually all music is available at the click of a mouse.

        Two billion songs will be downloaded off Napster in January, Webnoise estimates, up from 1.4 billion in September, when it began measurements.

        Online music's future appears to be subscription-based, as all the labels and AOL Time Warner have announced plans to launch their own such services.

        Since the major labels sought an injunction to shut down the service, Napster has been recruiting them. An appeals court that met in October has yet to decide.

        If a new Napster debuts with access to music from the five major labels, “it's a 10, a huge deal,” says Phil Leigh, an analyst with the Raymond James investment-banking firm.

        However, if it's just two labels — BMG and EMI, which BMG is negotiating to purchase — Mr. Leigh says, “it's a 3.”

       



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