Internet music business Napster Inc.
plans to start charging subscription fees by June or July of this
year, Bertelsmann AG chairman Thomas Middelhoff said.
"We carried out market research among 20,000 Napster users. The
willingness to pay is given," the head of the Germany media
company said Monday during the World Economic Forum in this Swiss
Bertelsmann, the parent company of the BMG music unit, signed a
watershed cooperation deal with Napster in October. It's trying to
bring the Internet music site together with other players in the
industry in an effort to legitimatize the popular Web site.
Earlier this month, independent record label TVT Records
announced it was dropping its lawsuit against Napster, becoming the
second such record label to do so after Bertelsmann itself.
However, much of the world's recording industry remains at
loggerheads with Napster, a Web site that allows registered users
to swap music files free of charge. The industry says the Napster
model is a breach of copyright and results in a loss of royalties
for the artists and the recording companies.
By changing to subscriptions, however, Napster runs the risk of
losing its users to other online companies that continue to provide
music exchange at no charge.
Napster is in talks to enlist other record companies, including
the four other majors Sony, EMI Group, Warner Music and Universal.
The Redwood, Calif.-based Napster claims millions of users,
including 1.6 million users online at any one time.
Analyst Eric Scheirer of Cambridge, Mass.-based Forrester
Research said the plan had potential, but a few things need to be
worked out first.
"There are people that are ready to pay out there," Scheirer
However, he said, Bertelsmann would need to offer more than
simply BMG artist content to convert Napster users to a paid
service solution. Titles from all labels would need to be included
among the selections to make the move a success, he said.
"Music fans really want the opportunity to choose from the
entire body of recorded music," Scheirer said. "If we want to
raise the price we're going to have to raise the opportunity."
A Napster spokeswoman said the company has not set a definitive
date for beginning to offer the new membership-based service.