News Burst: Napster offer gets cool reception
Industry experts say Wednesday that Napster's offer to the music industry of a $1bn (£600m) payment over five years is unlikely to be successful.
According to analysts, the labels would be more interested in distributing their music over the Internet themselves than letting Napster make money by doing it for them. They think it unlikely that the big five labels -- Sony, Warner, Universal, EMI and BMG -- will accept the deal under which they would share $150m each year in exchange for allowing Napster to distribute their music.
Paul Myers, chief executive officer of Wippit, a company that is developing a Napster-like service that will let users swap MP3 files on a royalty basis, agrees. He says the offer is no more than a PR tactic.
"It's just a headline grabber. The labels would be crazy to accept, because this figure hasn't been properly calculated and doesn't come close to the compensation the industry deserves," he told ZDNet. Wippit hopes to earn revenue by charging an annual fee and by carrying advertising.
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