Associated Press
SAN FRANCISCO — The recording industry balked at Napster Inc.’s $1 billion offer to settle a copyright infringement lawsuit, viewing the proposal put forth by the free online music-sharing service a publicity ploy without serious merit.
Under the proposal, $150 million would be paid annually for five years to Sony, Warner, BMG, EMI and Universal. An additional $50 million would go to independent labels in each of those five years.
Napster envisions paying the record companies through monthly subscriptions ranging from $2.95 to $9.95.
Industry analysts doubted that major record labels would allow Napster and Bertelsmann, a financial backer of the Internet file-sharing upstart, to control the online distribution of millions of songs.
"Napster is basically trying to purchase the copyrights and resell them," said Susan Billheimer, an analyst with Zona Research. "The record companies have an interest in distributing their music themselves over the Internet."
Indeed, record labels urged Napster on yesterday to accept a federal injunction ordering it to block copyright music from its service.
"This path would be more productive than trying to engage in business negotiations through the media," Hilary Rosen, president of the Recording Industry Association of America, said before Napster made its offer public.
Napster CEO Hank Barry said the company is seeking an agreement similar to the one MP3.com signed with the major record labels — a multimillion-dollar deal to make certain songs available online for consumers who have purchased the right to hear them.
"MP3.com paid $163 million for a nonexclusive license and that’s all we want. We want a nonexclusive license," Barry said.
The offer was announced a week after a federal appeals court signaled the end is near for Napster’s free service, saying the music industry almost certainly will win its suit against the pioneering digital entertainment company.
Under last week’s ruling from a three-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals, the company was ordered to stop the millions of people who use it as a clearinghouse to swap copyrighted music without charge and without restriction.
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