Bertlesmann + Napster

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From: Lucas Gonze (
Date: Tue Oct 31 2000 - 09:06:16 PPET

From Digital Music Weekly:


Bertelsmann Forms Alliance With Napster For Secure P2P Service

 International entertainment powerhouse Bertelsmann announced this
morning that it has formed a strategic alliance with Napster to
further develop Napster's peer-to-peer file-sharing service.

Bertelsmann's new eCommerce Group (BeCG) will work with Napster to
offer a new secure, membership-only P2P service. Bertelsmann, which
is the parent company of BMG (one of the five major record labels),
said it will provide its catalog to the new service, and it will also
seek support and participation from other labels.

As one of the major labels, BMG had of course been involved in the
ongoing record industry litigation against Napster, but under terms
of this alliance, it will withdraw its lawsuit after the introduction
of the new secure membership service.

Under other terms of the deal, BeCG will provide a loan (of an
undisclosed amount) to Napster to develop the new service and will
hold a warrant to acquire a portion of Napster's equity.

In a statement, the companies said that the new file-sharing service
will preserve "the Napster experience while at the same time
providing payments to rightsholders, including recording artists,
songwriters, recording companies and music publishers."

Andreas Schmidt, the president and CEO of BeCG, said, "We will work
closely with Napster to establish a new membership-based service that
achieves acceptance by other music providers. For recording artists
and songwriters, we hope to realize Napster's full potential as a
promotional vehicle while protecting their interests. For the
recording industry, we are looking to take a positive and
forward-looking approach with a membership-based service that
complements other forms of music distribution."


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