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FC: Napster offers music industry $1 billion payoff, with strings
From: Declan McCullagh <declan () well com>
Date: Wed, 21 Feb 2001 00:03:50 -0500

I'm scheduled to be on CNN Early Edition today at 8:40 am ET to chat
about the below. See also:




   February 20, 2001
                             Napster, Inc. BeCG
   What did Napster unveil today?
   Napster unveiled the business model for its new membership-based
   service. This business model has not changed substantially for the
   last six months and has been presented to all the major labels. The
   technology has been under development since prior to the October 31,
   2000 agreement. The new Napster will make payments to major labels,
   songwriters, and independent artists.
   How much revenue could be generated for the recording industry and how
   did you arrive at that figure?
   Napster's proposal will provide $1 billion to the major labels,
   songwriters and independent labels and artists over 5 years. Major
   labels will receive $150 million per year for a non-exclusive license,
   divided according to files transferred. For example if the transfers
   were evenly divided among five major labels, each would receive $30
   million. $50 million per year will be set aside for independent labels
   and artists to be paid out based on the volume of transfers.
   How will the rightsholders for each track get paid?
   Labels will receive a lump sum payment, $30 million per year, for a
   non-exclusive license. Independent labels and artists will be paid
   based on the basis of the number of transfers over the system out of a
   fund of $50 million per year.
   How do you know that Napster users will pay?
   Our research strongly suggests that a high percentage of Napster users
   are willing to pay. We will not be certain until we actually begin
   charging, but we do know that Napster has become an important part of
   daily life for a lot of people. We have been conservative in our
   membership projections.
   What will the pricing structure be?
   Napster is planning a tiered membership model that includes a "Basic
   Membership" plan and a "Premium Membership" plan. Definitive pricing
   has not been set. However, Napster is looking at a price range of
   $2.95 to $4.95 per month for the Basic membership that would have a
   monthly file transfer limitation built in. The Premium membership,
   which could cost between $5.95 and $9.95 per month would offer
   unlimited file transfers.
   When is the new service launching?
   This summer.
   Why are you unveiling this now?
   You might have noticed that we got some pretty bad news last week from
   the court of appeals. Now that the industry has the legal precedent
   they were seeking, it is time to reach an agreement. The RIAA has been
   saying the consumer comes first, the consumer comes second, and the
   consumer comes third. If the industry has the consumer, and their own
   bottom line in mind, there is an agreement to be had here.
   Napster Company Info

   Julie Gladders
   MPRM Public Relations
   (for Napster)
   Phone: 323-933-3393
   Email: jgladders () mprm com BeCG Company Info
   Frank Sarfeld
   Senior VP / Chief Communications Officer
   Phone: 646-752-3170
   NY Office: 646-758-0531
     Alexander Adler
   Director, Corporate Communications
   Phone: +49-40/82 2262 -320
   E-mail: Alexander.Adler () becg com

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