Bertelsmann and Napster unite

Bard

Bertelsmann AG, owners of BMG Music have announced a strategic alliance with none other than the infamous Napster

The following is taken from : http://www.dealinfo.com/BeCG-Napster/

Bertelsmann AG and Napster, Inc. today announced the formation of a strategic alliance to further develop the Napster person-to-person file sharing service.

Bertelsmann AG's newly formed eCommerce Group, BeCG, and Napster have developed a new business model for a secure membership-based service that will provide Napster community members with high quality file sharing that preserves the Napster experience while at the same time providing payments to rightsholders, including recording artists, songwriters, recording companies and music publishers.

Napster and Bertelsmann will seek support from others in the music industry to establish Napster as a widely accepted membership based service and invite them to participate actively in this process.

Under the terms of the agreement, once Napster successfully implements its new membership-based service, Bertelsmann's music division, BMG, will withdraw its lawsuit against Napster and make its music catalogue available.

Bertelsmann eCommerce Group will provide a loan to Napster to enable development of the new service and will hold a warrant to acquire a portion of Napster's equity.

Thomas Middelhoff, Bertelsmann's Chairman and Chief Executive Officer, said "Person-to-person file sharing has captured the imagination of millions of people worldwide with its ease of use, global selection of content, and community features. Napster has pointed the way for a new direction for music distribution, and we believe it will form the basis of important and exciting new business models for the future of the music industry. We invite other record and publishing companies, artists and other industry members to participate in the development of a secure and membership-based service."

Hank Barry, CEO of Napster, said, "This strategic alliance with Bertelsmann is the right next step for Napster. The Napster community - which is the fastest-growing in the history of the Internet - will benefit enormously from Bertelsmann's historic commitment to innovation and its experience in offering a seamless and convenient user experience."

Andreas Schmidt, President and CEO of Bertelsmann eCommerce Group, said, "Our strategic alliance with Napster is key to providing consumers in the future with access to the largest global music catalogue of high quality music files -- with added convenience and features. 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."

Shawn Fanning, founder of Napster, said: "I am excited that Bertelsmann appreciates and values the uniqueness of the community Napster users have built. I look forward to Napster becoming a part of even more people's lives, helping the way people discover and explore music."

Strauss Zelnick, President and CEO, BMG Entertainment, said: "Bertelsmann's forward-thinking approach will enable the new Napster membership-based file sharing service to become an important community for artists, record companies and consumers. BMG, as a leader in the online space, supports an array of secure, digital distribution alternatives that respects copyrights, including file sharing, downloads and subscription services."

About BeCG
The Bertelsmann eCommerce Group (BeCG) was founded in June 2000 as part of Bertelsmann AG. Bertelsmann has combined all of its e-commerce companies, stakes and holdings, such as www.bol.com, BarnesandNoble.com, CDNOW, and Bertelsmann Broadband Group, in BeCG. The goal of BeCG is to become the leading global e-community and e-commerce network with exclusive access to the largest selection of media content. Through strategic alliances with AOL and TerraLycos, Bertelsmann has direct access to over 200 million online users world-wide. With nearly 32 million unique visitors each month, Bertelsmann is the world-wide leading Internet provider among media companies. As the most international media company, Bertelsmann is assuming its world-wide leading position. Publishers, music companies, book and music clubs, newspapers and magazines, TV and radio broadcasters, print and media services, multimedia companies, and professional information with publishing houses and brands such as Random House, BMG, Gruner + Jahr, RTL, and the professional information group BertelsmannSpringer all belong to the group, which currently employs 76,000 people in 54 countries.

About Napster
Napster is the world's leading person-to-person file sharing community, and the fastest growing community in the history of Internet with over 38 million passionate music fans. Napster provides music enthusiasts with an easy-to-use, high quality service for discovering new music and communicating their interests with other members of the Napster community. Napster's software application enables users to locate and share music files through a convenient to use interface, and features instant messaging, chat rooms and Hot List User Bookmarks. Napster, was founded in 1999 by Shawn Fanning, then an eighteen year-old freshman at Boston's Northeastern University. Napster and Shawn Fanning have received numerous industry awards for technology, innovation and marketing. In October 2000, Napster won several Wired Magazine Readers Rave Awards, including Best Music Site, Best Innovative Start-Up, and Best Guerilla Marketing; Shawn Fanning was named Tech Renegade of the Year.

Press Conference Note to Editors:
You are cordially invited to participate in the Bertelsmann / Napster press conference on Tuesday, October 31, 2000 at 12:00 PM EST at the Essex House Hotel in New York City, located on 160 Central Park South (between 6th and 7th Avenues), at the Grand Ballroom (ground floor). If you are unable to attend, you can participate by dialing 888-849-9221 (within the United States) or 212-896-6164 (internationally). You may also listen to the press conference via the Internet at http://www.dealinfo.com/BeCG-Napster at 12:00 p.m. EST. Real Network's RealPlayer, Microsoft Windows Media Player or Apple's Quicktime Player is required to access the webcast.

Additional information about Bertelsmann eCommerce Group and Napster, including photographs and bios of Andreas Schmidt and Hank Barry and Shawn Fanning can be found at http://www.dealinfo.com/BeCG-Napster.

---

Hecate

hmm...interesssting.

'membership based', I like that. I notice that nowhere in the article do they mention pricing. I would be very surprised if they dont start charging for it.

If BMG do, they certainly won't be able to preserve the 'napster experience'. The whole idea behind napster was that it was free, and if they AOL'ise it, I cant see it being very successful at all.

However, somthing will come along to take its place.

Bard

Then again, Metallica's attorney maintains that the deal won't stop the lawsuits and the RIAA are asking Napster to issue a personal apology to the band and drummer, Lars Ulrich.
http://news.cnet.com/news/0-1005-200-3415585.html?tag=st.ne.1002.thed.ni

---

Bard

From Volta Digital Media's newsletter:

On foot of last week's shock deal with Napster, Bertelsmann's CEO and chairman have stepped down. Michael Dornemann, leaves his position as chairman of BMG Entertainment as of late June and will resign from the executive board at the beginning of next year, while BMG president and chief executive Strauss Zelnick resigned effective Dec. 31. Dornemann cited a differing viewpoint as his reason to part company with Bertelsmann's. Both execs say they back the Napster deal but are said to be unhappy with a restructuring of television and Internet areas. Bertelsmann will form a strategic alliance with the outlaw Internet service and the deal includes a $50 million loan to Napster to develop a billing system for its 38 million users, with artists, songwriters, publishers and music labels getting a cut. Details of the deal are sparse, but a $4.95 monthly charge to subscribers has been mentioned. Bertelsmann will also withdraw its lawsuit against Napster once the upgraded services goes live.