Napster makes a billion-dollar offer

SAN FRANCISCO, FEB. 21. Napster Inc. has offered $1 billion to the recording industry to settle the copyright infringement suit that threatens to shut down the free internet song-swapping service. Under the proposal made yesterday, $150 million would be paid annually for five years to Sony, Warner, BMG, EMI and Universal. An additional $50 million would go to independent labels in each of those five years.

Napster believes it can generate hundreds of millions of dollars to pay record companies, mostly through monthly subscriptions ranging from $ 2.95 to $ 9.95. It has tried to reach agreements with record companies, but has done so only with BM parent Bertelsmann Inc.

Analysts said they doubted whether the rest of the recording industry would allow Napster and Bertelsmann to control the online distribution of their music.

``Napster is basically trying to purchase the copyrights and resell them,'' said Ms. Susan Billheimer, an analyst with Zona Research. ``The record companies have an interest in distributing their music themselves over the internet.''

Napster CEO, Mr. Hank Barry, flanked by company founder, Mr. Shawn Fanning, at a press conference in San Francisco, said it is crucial for all parties involved to reach an agreement ``as fast as we can''.

Napster's new proposal follows earlier settlement efforts with the recording industry which met with little success. Unlike the previous offer, its current proposal is based on the number of files traded over its service rather than a percentage of record company revenues.

Industry sceptical

Many industry observers quickly scoffed at the proposal noting that $1 billion over five years does not even come close to the money the labels have figured they are due for infringements on the service which facilitates the downloading of billions of songs each month.

Record labels instead urged Napster to accept the Federal injunction ordering it to block copyright music from its service. ``This path would be more productive than trying to engage in business negotiations through the media,'' Ms. Hilary Rosen, president of the Recording Industry Association of America, said before Napster made its offer public.

- AP, Reuters

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