Bertelsmann and Napster form Strategic Alliance
Will Establish Industry Accepted Community for File Sharing
Invite Others in Music Industry to Participate
Bertelsmann AG and Napster, Inc. today announced the formation of a
strategic alliance to further develop the Napster person-to-person file sharing
service.
Bertelsmann AG’s newly formed eCommerce Group, BeCG, and Napster have
developed a new business model for a secure membership-based service that
will provide Napster community members with high quality file sharing that
preserves the Napster experience while at the same time providing payments to
rightsholders, including recording artists, songwriters, recording companies and
music publishers.
Napster and Bertelsmann will seek support from others in the music industry to
establish Napster as a widely accepted membership based service and invite
them to participate actively in this process.
Under the terms of the agreement, once Napster successfully implements its
new membership-based service, Bertelsmann’s music division, BMG, will
withdraw its lawsuit against Napster and make its music catalogue available.
Bertelsmann eCommerce Group will provide a loan to Napster to enable
development of the new service and will hold a warrant to acquire a portion of
Napster’s equity.
Thomas Middelhoff, Bertelsmann’s Chairman and Chief Executive Officer, said
"Person-to-person file sharing has captured the imagination of millions of people
worldwide with its ease of use, global selection of content, and community
features. Napster has pointed the way for a new direction for music distribution,
and we believe it will form the basis of important and exciting new business
models for the future of the music industry. We invite other record and
publishing companies, artists and other industry members to participate in the
development of a secure and membership-based service."
Hank Barry, CEO of Napster, said, "This strategic alliance with Bertelsmann is
the right next step for Napster. The Napster community — which is the
fastest-growing in the history of the Internet — will benefit enormously from
Bertelsmann’s historic commitment to innovation and its experience in offering a
seamless and convenient user experience."
Andreas Schmidt, President and CEO of Bertelsmann eCommerce Group, said,
"Our strategic alliance with Napster is key to providing consumers in the future
with access to the largest global music catalogue of high quality music files --
with added convenience and features. We will work closely with Napster to
establish a new membership-based service that achieves acceptance by other
music providers. For recording artists and songwriters, we hope to realize
Napster’s full potential as a promotional vehicle while protecting their interests.
For the recording industry, we are looking to take a positive and forward-looking
approach with a membership-based service that complements other forms of
music distribution."
Shawn Fanning, founder of Napster, said: "I am excited that Bertelsmann
appreciates and values the uniqueness of the community Napster users have
built. I look forward to Napster becoming a part of even more people’s lives,
helping the way people discover and explore music."
Strauss Zelnick, President and CEO, BMG Entertainment, said: "Bertelsmann’s
forward-thinking approach will enable the new Napster membership-based file
sharing service to become an important community for artists, record
companies and consumers. BMG, as a leader in the online space, supports an
array of secure, digital distribution alternatives that respects copyrights,
including file sharing, downloads and subscription services."
About BeCG
The Bertelsmann eCommerce Group (BeCG) was founded in June 2000 as part
of Bertelsmann AG. Bertelsmann has combined e-commerce companies, stakes
and holdings, such as www.bol.com, BarnesandNoble.com and CDNOW in
BeCG. The goal of BeCG is to become the leading global e-community and
e-commerce network with exclusive access to the largest selection of media
content. Through strategic alliances with AOL and TerraLycos, Bertelsmann has
direct access to over 200 million online users world-wide. With nearly 32 million
unique visitors each month, Bertelsmann is the world-wide leading Internet
provider among media companies. As the most international media company,
Bertelsmann is assuming its world-wide leading position. Publishers, music
companies, book and music clubs, newspapers and magazines, TV and radio
broadcasters, print and media services, multimedia companies, and
professional information with publishing houses and brands such as Random
House, BMG, Gruner + Jahr, RTL, and the professional information group
BertelsmannSpringer all belong to the group, which currently employs 76,000
people in 54 countries.
About Napster
Napster is the world's leading person-to-person file sharing community, and the
fastest growing community in the history of Internet with over 38 million
passionate music fans. Napster provides music enthusiasts with an
easy-to-use, high quality service for discovering new music and communicating
their interests with other members of the Napster community. Napster's
software application enables users to locate and share music files through a
convenient to use interface, and features instant messaging, chat rooms and
Hot List User Bookmarks. Napster, was founded in 1999 by Shawn Fanning,
then an eighteen year-old freshman at Boston's Northeastern University.
Napster and Shawn Fanning have received numerous industry awards for
technology, innovation and marketing. In October 2000, Napster won several
Wired Magazine Readers Rave Awards, including Best Music Site, Best
Innovative Start-Up, and Best Guerilla Marketing; Shawn Fanning was named
Tech Renegade of the Year. |
