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Napster offers the music industry a billion dollars

A billion dollars is apparently the proof that the new medium Internet also follows the old laws of economy and judiciary. In any case, the Internet exchange platform Napster, together with its solvent partner Bertelsmann, is offering the rest of the music industry a billion dollars to prevent legal arbitration. Napster enables its users to find and exchange music files free of charge. Since most of the material is protected by copyright, four record companies sued in the U.S. – and got right in two instances (yellow-red card for Napster). A court order is currently being revised, but it is clear that Napster will have to stop the exchange of copyrighted material.

The now published offer is aimed at a supra-judicial settlement. If music publishers accept the offer, they will no longer have a cause of action, as they will no longer suffer any material damage. Napster is offering the four major music publishers EMI, Sony, Universal and Warner 150 million dollars a year for the next five years. The exact distribution will depend on the amount of material actually exchanged on Napster. Another 50 million dollars in license fees are to be paid annually to smaller companies, again distributed according to the quantity of their works exchanged on Napster.

The courted companies react cautiously. "One billion is not much when you consider that $35 to $40 billion a year in revenue is at risk from Napster", said Richard D. Parsons of AOL Time Warner. The president of the Recording Industry Association of America RIAA, Hilary Rosen declared: "We understand that Napster does not want to stop its operation because of a court order. But they simply do not have a system to bring together the interests of consumers and artists." But this must first be created. RIAA speaks of a PR strategy and delaying tactics in court.

Nevertheless, the offer is the first concrete attempt at a new business policy, thanks to Napster’s partner Bertelsmann. In October 2000, the company granted Napster a loan of 200 million dollars. Starting this summer, Napster now wants to charge its current alleged 64 million users. Up to 9.95 dollars per month is to cost the unlimited exchange of files. There may be an additional charge for users who want to burn music to CD. Napster expects to have only one million customers and revenues of $60 million in its first year of business after the fee is introduced. In 2005, however, Napster expects to have 14 million customers and $832 million in revenue.

Even if it looks different at the moment, there is little to say against an agreement. Because Napster. Some want money from Napster, others from their users. The conflict works according to well-known economic principles and patterns of action. It is not the anti-capitalist freedom struggle it is often made out to be. And Napster ultimately works according to the modified business principle of a radio station. Data is stored decentrally at the users, but the information, where to find something, lies solely on the central computers of the company. Information monopolies are an excellent business concept. If Brecht’s radio theory of everyone as an equal sender and receiver had become reality, there would be no Napster, no profit forecasts and no lawsuit either.

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