LOS ANGELES -- Bertelsmann chairman Thomas Middelhoff said the major record labels are ready to license their music to a new Napster service when it debuts on July 1.
But two music industry executives say Middelhoff is a bit optimistic about their willingness to play along.
"Today, I'm more than happy that all the CEOs of the other music companies think Napster should be licensed as long as it is legitimate," Middelhoff said in a speech to the World Affairs Council.
Middelhoff said a re-launched Napster will likely charge $2.95 to $4.95 a month for a basic service and $5.95 to $9.95 for a premium service. Bertelsman, which owns the BMG label, has invested in Napster as part of a bid to convince music companies to drop their lawsuits and support a "legal" version of the service.
Last week, District Court Judge Marilyn Patel issued an injunction ordering Napster to begin police its network for copyright infringement. The recording industry and copyright holders were to begin sending Napster lists of copyrighted songs found on its system, and Napster would then have 72 hours to block access.
A representative for a major record label who asked not be identified said the labels have not committed to supporting a legalized Napster. "In theory, we're open to work with any system that respects copyrights," the spokesman said. Napster has "yet to show that."
An executive at the Recording Industry Association of America said a "safe secure system that pays royalties to artists and copyright holders would at least be worth looking at," but wouldn't automatically be assured of record industry approval. The RIAA filed suit to prevent Napster's service from allowing its users to freely trade copyrighted material on the Internet.
In February, the recording industry scoffed at Napster's offer of a $1 billion licensing agreement.
Middelhoff's comments come as Napster seeks a way to survive until it can launch a new service that charges customers for the right to download copyrighted music.
While insisting that he has the music industry's support, Middelhoff acknowledged the possibility that Napster's current service could be shut down. If so "customers will be forced to go to other sites, and the music industry will lose them."
In any case, the industry should recognize that if Napster "does not cooperate with the judge, then of course it will be shut down," Middelhoff added.
The industry would make a major mistake if it seeks to "criminalize" the millions of people who downloaded Napster files. Most, he said, are music lovers, not thieves.
He cited a conversation with a prominent, 60-year-old businessman last Friday who admitted he was a heavy user of Napster, using it to find pieces he couldn't find in music stores.
Peer-to-peer file sharing is here to stay, and is an example of a digital revolution that media and entertainment companies must embrace, Middelhoff said. Media companies will have to "completely digitize their content" -- whether it be books, films or music –- and find new ways to distribute it.
Middelhoff said cellular phones, for example, may become significant instruments for distributing digital content; and book lovers may sample a chapter of a book online before deciding to download the rest or order a hard copy of it.
