New Napster on hold until next year; other online music services forge ahead

By Ron Harris The Associated Press The Associated Pres
Tuesday October 30, 2001

LOS ANGELES — Napster won’t let the music play until some time next year. 

The embattled song-swapping service’s chief executive, Konrad Hilbers, told a technology conference Monday that the company must still license more major record label music before it can go back online. That will probably be in the first quarter of next year, he said. 

Napster has been off-line since July in an effort to comply with a federal judge’s order that the free music trade be halted. Hilbers said Napster will replicate its popular file-sharing service in a secure environment while pressing for licensing deals with major labels. 

He hopes a settlement of the suit his company faces can help Napster recreate the song downloading magic that brought the company 60 million users at its peak. 

“Music, I think, makes close friends of people with nothing in common but a shared love of Incubus or Jerry Garcia’s Grateful Dead,” Hilbers said. 

Whenever Napster’s new service does come back online, Hilbers reiterated that digital song downloads will include technology that prevents unlimited copying and free distribution. 

All five major labels have vowed to come out with subscription online music services before year’s end. Sony and Universal have partnered to form pressplay while MusicNet is the joint venture of Warner, BMG and EMI. 

Analyst Phil Leigh, of Raymond James and Associates, said even if Napster remains on hold until early 2002 it could possibly time its re-emergence successfully. 

Leigh said Music Net and pressplay could serve to warm up consumers to the idea of subscribing for online music, to the benefit of Napster’s relaunch. 

“It doesn’t hurt Napster if they come in later when the offering becomes more attractive,” Leigh said. 

Jim Griffin, cheif executive officer of Cherry Lane Digital, said at the conference that the online music industry is not quite ready for prime time. He said the industry still needs a large pool of money and a fair way of dividing those funds up among copyright holders and music publishers. 

He said subscription online music businesses and major record labels would need to ignore many of the traditional models that worked for the recording industry in the past. Whatever business models emerge, they’ll be worlds apart from their predecessors, Griffin said. 

“It will not be about control. It will not be about clinging to content,” Griffin said. 

He predicts that subscribers will pay by the month, not per song, for downloaded and streaming music.  

Griffin believes wireless broadband access is a key component to the success of online music, a notion that dovetails with the goals of Evolab, a company he founded that focuses on wireless media services. 

Listen.com is making another play at the changing music landscape. Once merely a directory of legally downloadable music, the service is about to be reborn and will launch a new streaming music platform called Rhapsody. 

Rhapsody, set to launch in about two weeks, is an application where users can store and access streaming song playlists for a subscription fee set by independent distributors. 

But the same problem exists for Rhapsody, as with many others — no big name content. So far, Listen.com only has signed licensing deals with 37 independent labels to provide music content to the Rhapsody service. 


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