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New Napster to Play by Music Industry's Rules

The fee-based version faces tough competition from online stores and free networks.

October 07, 2003|Jon Healey | Times Staff Writer

Having launched one revolution in the music industry, Napster comes back to life this week in a bid to foment a counterrevolution: persuading people who download songs free to start paying again.

Like the original, the new version of Napster being launched Thursday by Roxio Corp. offers music fans a way to build their collections that's very different from buying CDs. This time, it's an industry-authorized mix of music rentals and pay-as-you-go downloads.

But the competition is much fiercer now than it was in 1999, when 18-year-old Shawn Fanning unleashed the pioneering Napster file-sharing service. Roxio not only faces a growing number of rivals licensed by the record labels but also a slew of free file-sharing networks that attract an estimated 63 million people in the U.S. alone.

Meanwhile, advocates of file sharing are pushing ways to legitimize networks that allow users to swap tens of millions of songs a day from computers all over the world.

One such plan, expected to be unveiled Wednesday, would automatically bill file sharers for their downloads and compensate the industry for its music. Backers say the plan would generate $900 million a month for the music industry within three years, boosting revenues for labels, artists and music publishers.

The proposal has been endorsed by the company behind Kazaa, the most popular file-sharing network. But to succeed, it must be embraced by the recording industry, as well as rival file-sharing companies, Internet service providers and users.

Analyst Michael McGuire of GartnerG2, a technology research firm, said all the changes in the online music business have made this a great time for risk-taking music distributors -- but not necessarily for record companies, which have watched CD sales plummet in recent years.

"If you're still trying to protect what amounts to a 100-year-old business model," McGuire said, "things must look pretty bleak right now" because music fans have voted en masse in favor of free file sharing. The issue, he said, is "how do you get them back in the corral?"

The major record labels shut down the original Napster in 2001 with a federal court injunction that barred its users from violating copyrights. Roxio, which bought the Napster name and technology at a bankruptcy auction last year, is reviving the brand just as a host of major competitors are jumping into the field with the labels' blessing.

Those businesses include online music stores that charge about $1 for each downloadable song and subscription services that charge about $10 a month to hear or rent an unlimited number of tracks. Roxio's Napster will offer both a store and a subscription service, as will soon-to-be-launched alternatives from RealNetworks Inc. and AOL Time Warner Inc.'s America Online.

Although they mimic the traditional way of buying music, the stores offer one significant improvement for music fans: Customers can buy individual songs, not just full CDs or singles chosen by the record label. But there are downsides too. Not every artist or song is available, and the tracks are wrapped in electronic locks that limit their ability to be copied or transferred.

Subscription services are a more radical departure from conventional music buying. They offer an unlimited amount of music for a flat monthly fee, but most require that the music be played on a computer. And they typically cut off access to those songs if a customer cancels a subscription.

The technology behind Roxio's Napster was built around an overhauled version of Pressplay, the online music service that Vivendi Universal's Universal Music Group and Sony Corp.'s Sony Music Entertainment sold to Roxio in May. Subscribers of the new Napster would pay $10 a month to play an unlimited number of songs from an Internet jukebox or download "tethered" versions to be played when they're not online. It would cost about $1 to move a tethered song to a portable device or burn it onto a CD.

By this time next year, Napster executives hope to enhance the service by allowing subscribers to move an unlimited number of songs onto selected portable devices and take them wherever they go. But that depends on Microsoft Corp. delivering the necessary technology.

The concept of tethered songs is so alien to music buyers that some online services don't offer them. For example, RealNetworks' Rhapsody service has no downloadable songs, just music that subscribers play from an online jukebox.

File-sharing advocates say the most direct approach is to give file sharers an easy way to pay for music on the networks they already use.

The plan being revealed Wednesday, from Distributed Computing Industry Assn., a trade group for peer-to-peer file-sharing networks, will offer a two-step method for the music industry to collect for works shared online.

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