The deal means BMG -- one of the 'Big Five' music companies -- will withdraw its lawsuit against Napster, loan it some money, and acquire a stake in the business. The pair then plan to launch a subscription-based song-swapping service, charging users $4.99 (around £3) per month.
But the deal has been slammed by ZDNet readers in the Talkback forums and the once maverick champion of free music stands accused of selling its soul to the music industry.
Chris Cass, UK managing director of music download site Vitaminic, says Napster's credibility is at stake. "Napster's appeal is that it was seen as an underground music [site]. I used to see people wearing Napster T-shirts, proclaiming their tribal colours, and I expect we'll soon see those people changing their allegiance to Scour or Gnutella."
According to latest figures from Media Metrix, Napster had 6.7 million unique users in August 2000, making it the fastest growing Internet application ever.
Apart from its potential image problem, Cass predicts that the random nature of the service could also be a problem. "Users will pay a subscription, but there's a chance that the person you're downloading from might suddenly turn off their computer and go to bed, and you lose the file." Cass believes monetising the anarchic nature of Napster, could pose real problems.
"The word on the bulletin boards is that 'this deal sucks'," adds Cass.
Jollyon Benn, Internet investigative executive at the British Phonographic Industry (BPI), disagrees, arguing that making deals with other labels is key, not just to Napster's success, but its very survival. "As a music fan, I found Napster really exciting. For this new service to succeed it must have the same choice and gamut of content as the original."
It is not clear how Napster and BMG will work the new service. Neither BMG or Napster had returned calls at press time.
Take me to the MP3 Special
Did Napster sell out? Andreas Schmidt of Bertelsmann and Napster's Hank Barry chose Halloween to dress up as the industry's newest best buddies. Now they need to convince the RIAA to play along or Charles Cooper thinks this party is going to fizzle out even before it even gets started. Go to AnchorDesk UK for the news comment.
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