Napster Inc, the free music-sharing Web site, said it will become an affiliate of MusicNet, a joint venture formed by three of the biggest music companies that eventually may let Napster sell their music online.
MusicNet first will offer Napster access to the venture's technology, though it won't license Napster to sell music online until the site is operating in a "legal" manner that doesn't infringe music copyrights, the companies said in a statement.
Napster, which is used by more than 6 million users a day, could deliver a wider audience for the three music companies that back MusicNet -- AOL Time Warner Inc, EMI Group Plc and Bertelsmann AG. A partnership with the big record labels also could help Napster survive a court order that's forced it to try to block copyright infringement by its users.
"EMI has always said that we'd be prepared to consider licensing our music to Napster, but only when certain critical conditions are met, particularly in the area of copyright," the company said in a statement. "Those conditions have not yet been met." The agreement won't affect a lawsuit filed by the music industry accusing Napster of copyright, the New York Times reported earlier.
AOL's Warner Music Group said in a statement that "our content will not be available to Napster as part of the MusicNet service until we are reasonably satisfied that Napster is operating in a legal, non-infringing manner." RealNetworks Inc, which makes the software that will deliver the MusicNet service, also is a partner in the joint venture.
Analysts said that while an agreement would be a step in the right direction, it wouldn't mean much unless Napster has the ability to license the music.
"If it's technology, it's less of a story, but when they start talking about the licenses, then it gets interesting," said Gartner analyst P. J. McNealy. "It potentially gives [Napster] a revenue stream they don't currently have." To comply with a court order issued in March, Napster has installed software that blocks the free trading of most of the copyright-protected music on its system.
The number of songs downloaded using Napster fell 87 percent to 360 million in May from a peak of 2.79 billion songs downloaded in February, according to Webnoize, which reports on the online music business. In May, the average number of simultaneous users fell 46 percent to 844,000 from a peak of 1.57 million in February.
"The filtering technology does seem to be doing its job now," Webnoize analyst Matt Bailey said. "The number of downloads has fallen drastically. At this stage, Napster as a file-sharing network is pretty much disabled."
AOL, Bertelsmann and EMI formed MusicNet to sell music online in an effort to compete with Napster and other online services that allow users to trade music files for free.
Napster is the third company signed up to offer the MusicNet service. AOL's American Online service and RealNetworks were the first two. Napster is expected to begin offering the service by "late summer or early fall," MusicNet and Napster executives said on a conference call.
Users of Napster's service who also subscribe to MusicNet will be able to share songs downloaded from MusicNet with other MusicNet subscribers on the Napster system, the companies said.
The two other major music companies, Sony Corp and Vivendi Universal SA, are not part of MusicNet. They formed their own joint venture to sell music online called Duet.
RSS