e.Digital Corporation (fka EDIG)

[Tinroad]

New Napster Chief Looks Ahead
By Noah Shachtman
10:43 a.m. July 24, 2001 PDT
http://www.wired.com/news/print/0,1294,45504,00.html

NEW YORK -- Napster may be dead, but its new CEO proclaimed the music-swapping service will live a long time.

Appearing in public within hours of the news that he was tabbed to replace interim CEO Hank Barry, Konrad Hilbers didn't reveal much in his first day on the job.

But he told a packed hall of music and technology executives at Jupiter Media Metrix's Plug.In Forum that the "Napster brand cannot be killed."

Furthermore, Hilbers, the former chief administrative officer of BMG Entertainment and former CEO of CompuServe, said Napster is "on the track toward becoming a legitimate service ... that rewards artists and copyright holders."

But in terms of delivering any real nuggets about his plans, Hilbers came up short.

"We didn't learn much, is the bottom line," Jupiter Media Metrix analyst Mark Mooradian said.

Hilbers struck conciliatory and positive notes in front of the crowd at the New York Sheraton. The major labels that sued Napster were merely "defending their rights," he said.

It was a rather remarkable statement in that it's the first time a Napster official has conceded that the labels had a legitimate reason for filing a copyright infringement suit in December 1999. And it comes at a critical time, because Napster needs to strike deals with the record companies before it can cash in on a $50 million loan promised by the German media conglomerate Bertelsmann AG.

Without settling the copyright infringement lawsuit, Napster might eventually be forced to shut down for good.

He noted that Napster still has 800,000 users logging on every day in its severely limited state, but he's not concerned that currently Napster is down.

However, he added, it will take significant efforts to "get us to critical mass again."

Hilbers predecessor Hank Barry -- replaced virtually overnight -- will remain with the company in a reduced role, and will also serve on its board of directors. He appeared at the conference during an on-stage discussion with Jupiter's Aram Sinnreich and said that Napster's arrangements with Musicnet -- the soon-to-be-introduced Internet music subscription service backed by EMI, BMG, and AOL Time Warner -- will prevent Napster from offering songs from the investors in PressPlay, Musicnet's competitor.

"We agreed not to do direct deals with Sony and Universal for a period of time," Barry noted.

But Napster will continue to differentiate itself from other subscription efforts by providing unreleased and out-of-print material, he said.

Meanwhile, the executives masterminding the major labels' digital music subscription effort unveiled new details about their plans ­and offered veiled warnings to the publishers who might stand in their way.

Real Networks chief and Musicnet interim CEO Rob Glaser revealed that Zomba -- the giant independent label behind Britney Spears, R. Kelly, Tool and the Backstreet Boys -- had enrolled in the service.

Zomba will make its catalog exclusively available through Musicnet during the service's launch and will make a small, undisclosed equity investment in Musicnet, Glaser said.

Immediately afterwards, Vivendi Universal executive Edgar Bronfman Jr. said his fledgling PressPlay service will offer tunes for both streaming and download with Sony Music. Previously, PressPlay was reported to be a streaming-only service.

Bronfman also hinted PressPlay will launch in early September -- with or without the OK from the publishing arms of the record companies. To date, publishers have, by and large, been reluctant to sign up for such Internet music deals.

The major difference between PressPlay and Musicnet will be in pricing, Bronfman said.

While Musicnet's retail and portal partners like AOL and Napster will set the pricing for its service, PressPlay will offer a more standardized pricing plan because of concerns "that the continuing devaluation of music will continue unabated."