Napster bags Euro labels for pay service

At a press conference in London attended by Napster's creator, Shawn Fanning, Napster executives announced that music from independent labels would be included in the music-swapping company's new subscription plan, slated to go live later this summer. Earlier this month, Napster also announced a distribution deal with MusicNet, a separate subscription service launched by Warner Music Group, BMG Entertainment and EMI Recorded Music.

The agreement announced Tuesday, which took four months to achieve, gives the song-swapping site the rights to offer music from 150 independent labels and artists such as Moby, Belle & Sebastian and Ash.

"This deal moves Shawn's vision into a new phase, beyond the controversy of file sharing and into a new popularity," said Hank Barry, Napster's chief executive. Barry also denied claims that Napster would not meet a July 1 deadline for its subscription service.

The Association of Independent Musicians, which had a key role in negotiating the deal, said that it would help independent musicians get access to a wider community. "Under this deal, Napster will become a new way for artists to reach their fans, especially those musicians who don't get played on radio or MTV," said Alison Wenham, chief executive of AIM.

Neither AIM nor Napster would disclose the financial details of the deal.

MusicNet, which also counts streaming-media company RealNetworks in its ranks, is expected eventually to give Napster access to more than half of the mainstream music most often sought by consumers. The service is expected to be much like the original Napster, with members able to swap music at will. But under the plan, record labels will license the songs to eliminate the copyright problems that have dogged Napster in the last year and a half.

Napster has been calling for beta testers for its new subscription service since mid-May, when it launched an appeal for testers. That service, which predated the MusicNet deal, was originally met with skepticism from the industry, initially attracting only Bertelsmann, which owns BMG Entertainment. On Tuesday, Barry said that more than a million people had signed up for the beta testing.

Napster executives have said the new service is likely to cost between US$7 and US$14 (5 pounds and 10 pounds) a month depending on how much music consumers want to download. Songs downloaded would be limited in audio quality and unable to be burned to CD.

The free service will disappear shortly after the subscription service begins, executives have said.

The announcement follows Napster's setback at the hands of a federal appeals court in the United States, which determined Friday that the service must continue to block the swapping of copyrighted music.

In a terse, two-page order, the 9th US Circuit Court of Appeals denied two separate requests from Napster, saying it would not rehear issues it ruled on last February after record companies sued the service. At that time, Napster was ordered to install filters that slashed the number of songs available through the service, reducing traffic on the site precipitously and steadily.

According to industry consulting firm Webnoize, the average number of files shared per person on the Napster network fell from 220 in February to just 21 by the end of May. Webnoize also estimated that just 360 million files were traded through the service in May, compared with 2.79 billion in February.

Graeme Wearden reported from London.