posted Nov 01, 2000

BMG-Napster Deal Details
Music & MP3
11/1/2000; 12:31:56 PM

OK, so we're getting some more details on the BMG-Napster deal...

'The settlement calls for Bertelsmann's e-commerce group (BECG) to develop a paid membership service that would be separate from Napster's free 38 million member-strong free online swapping service. Presumably, Napster users will be able to purchase titles from Bertelsmann Music Group's (BMG's) entire catalog of music, while also being allowed to freely swap other titles on another area of the Web site. However, no date was announced for the new service, strongly suggesting that many details remain unanswered about this radically new business model....

'Mr. Barry stressed the new service will have a membership-based, as opposed to a subscription-based, model. "In a subscription, you pay money, you get something," he says. "In a membership model, you belong to a community, you participate in that community." He also said he expected the new service to price at $4.95 a month.'

This service will have high-quality downloads instead of user-generated junk. Sounds good so far...

'Napster must convince the other record labels that it can prevent paying subscribers from freely swapping the music they download using Napster via,, and other similar P2P sites. In July, Napster signed a research and development agreement with Liquid Audio, a Hummer Winblad-funded digital-rights management company. And just last week, BMG inked a deal with Intertrust Technologies to encrypt its entire music catalog.'

Uh-oh... nobody's proven this is possible yet. Many claim to have solved the problem... there's also a lot of people who believe it to be fundamentally impossible. I would say this could become a major sticking point in the future.


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