Napster near accord with three labels
By Russ Britt, CBS.MarketWatch.com
Last Update: 11:40 AM ET June 5, 2001
LOS ANGELES (CBS.MW) -- Online music swapping service Napster Inc. is near a licensing agreement that would allow it to market songs from three of the industry's five major recording labels, sources close to the parties said.
Bertelsmann AG (DE:522990: news, alerts) , AOL Time Warner Inc. (AOL: news, msgs, alerts) and EMI Group Inc. (UK:EMI: news, alerts) are expected to formally announce a pact either later Tuesday or early Wednesday, the sources said.
Saying that it was "quite obvious Napster would get the music," one source cited the company's powerful marketing presence prior to getting into legal hot water with the major music labels for putting unauthorized music files on the Internet.
Germany's Bertelsmann agreed to invest in Napster late last year if it developed a way to protect copyrighted music files that would compensate artists and record labels. The other two labels are part of an online music consortium with Bertelsmann and RealNetworks Inc. (RNWK: news, msgs, alerts) called MusicNet.
A fourth major label, Sony Corp. (SNE: news, msgs, alerts) , is expected to eventually join the other three and license its songs with Napster. Although part of a different consortium, called Duet, it formed with music leader Vivendi Universal (V: news, msgs, alerts) , Sony probably will still choose to license its material with Redwood City, Calif.-based Napster.
It's unclear what Vivendi's plans are. The Paris-based company already has announced agreements to purchase three online music services, the latest being MP3.com (MPPP: news, msgs, alerts) .
Russ Britt is a Los Angeles-based reporter for CBS.MarketWatch.com.
