Napster unveils pay plan
Co. to restrict what users can do with files
Move comes just days after the 9th U.S. Circuit Court of Appeals in San Francisco effectively upheld an injunction issued against Napster last July by District Court Judge Marilyn Hall Patel. The appeals court remanded the injunction back to Patel for a few modifications, but she is expected to issue a new order within weeks, potentially forcing Napster to close up shop.
But under the company's new system, developed with technical support and a $50 million loan from German media group Bertelsmann, Napster hopes to convince its legal foes that it has turned over a new leaf.
Company will use a proprietary technology to encrypt the files traded, restricting what the recipient can do with them. The person that receives the file could, for example, be prevented from burning it onto a CD, or passing it to someone else.
That type of versatility would, in theory, allow Napster to offer different levels of membership at varying prices. It would also provide for a revenue stream with which to pay royalties to rights holders such as record labels and music publishers.
Bertelsmann-managed
Bertelsmann's inhouse digital rights management unit Digital World Services will administer the system, which Bertelsmann topper Thomas Middelhoff has predicted could be up and running sometime this summer.
Announcement was the public's first look under the hood of a system that Napster and Bertelsmann have been developing since the unveiling of their joint venture last October. That system has been quietly shopped around to the major music companies in an effort to win their endorsement.
According to industry observers, however, there has been little support from the labels so far for the service, which Napster CEO Hank Barry last fall estimated would cost consumers around $5 per month.
BMG, the label group owned by Bertelsmann, is on board, of course, as are large indies Edel Music and TVT Records. But the other four majors are reluctant to join in, in large part because they're keen to develop their own digital distribution models rather than cede control to an outside entity.
Meanwhile, all five record groups -- including BMG -- are pressing ahead their with legal action against Napster. On Thursday, the Recording Industry Assn. of America and the National Music Publishers' Assn. filed a brief with Patel's court on behalf of the industry with suggestions as to how the new injunction should be structured.
Files ID'd
The industry's proposed draft injunction would require Napster to patrol its own system, rooting out and blocking files that violate the labels' copyrights. In the draft, the companies also demand that Napster block more than 12,000 infringing files that the RIAA has already identified.
Napster, however, claims it is technologically unable to search through and monitor its files at a level that would make it possible to weed out infringing files song by song. If Patel's new injunction follows the guidelines proposed by the industry, then the company may be forced to pull the plug on the entire service to comply.
