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Appeared on: Wednesday, February 21, 2001
Napster's offer not a hit with record industry

"...Some of the world's largest music companies gave a swift thumbs down on Wednesday to Napster's dramatic proposal to pay them $1 billion over the next five years for the right to use their music in the popular song-swapping service. Record company giants like Vivendi Universal's Universal Music and AOL Time Warner Inc.'s Warner Music expressed immediate dissatisfaction with Napster's proposal unveiled at a press conference in San Francisco on Tuesday. EMI Group said it would be interested in participating if there were a compelling and convincing business model.

Privately, many music executives said the Napster offer raised legal and financial problems for the recording industry, which has fought a bitter court battle against the service that it accuses of being a partner to the electronic shoplifting of music. "They're not taking the illegal service down, they're still stealing from us but are asking us to trust them" one executive said. Many industry observers are also still skeptical Napster can pull off its promise to provide a secure system by the summer. "They're saying they can't do it yet, technologically, but hang in with us" he said.

Third, the numbers don't appear to add up from the industry's perspective. "The CD business is a $40 billion a year business and they're asking to pay $200 million a year for all-you-can-eat music" another music executive said. Outlining a strategy they hope will keep the popular song-swap service alive in the face of a threatened legal injunction, Napster said it would pay $150 million a year in licensing fees to the world's five major record companies and $50 million a year in fees to independent labels and artists..."



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