Napster offers £690m to settle copyright case

Amy Vickers
guardian.co.uk, Wednesday February 21 2001 14.03 GMT

Beleaguered online music swapshop Napster has offered a potentially crippling £690m over five years to settle the copyright infringement lawsuit that threatens to shut it down.

The offer was announced in San Francisco last night, a week after a federal appeals court gave the clearest indication to date that Napster would lose its court battle.

Instead of putting up a further fight and spending another year in the appeal court, Napster has offered an olive branch to record companies in a bid to find a beneficial solution to the high-profile spat.

But record companies gave a muted reaction to the Napster's proposals.

Insiders are doubtful the recording industry will fall for this proposed deal.

Record companies are loathe to allow Napster and its parent company Bertelsmann to control the online distribution of their music.

Critics have been quick to point out the proposals are little more than a PR exercise.

Napster's settlement proposal does not even come close to the money the record companies believe they are owed for copyright infringement.

Under the proposal, £104m would be paid annually for the first five years to Sony, Warner, BMG, EMI and Universal.

An additional £35m has been allocated to cover the annual costs of dealing in music from independent labels.

To cover these huge costs, Napster believes it will be able to generate hundreds of millions of dollars through its plan to introduce monthly subscriptions by July.

The limited monthly download service is to cost users around £3, while the unlimited download service will be priced at around £6.

Napster has desperately tried to reach agreements with record companies since the lawsuit began last year.

So far it has only managed to bring BMG on-side.

Napster interim CEO Hank Barry urged a peace with the record companies.

"We all ought to sit down and settle this thing. This community ought to be allowed to stay together," he said.

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