Napster Strikes Deal With First of Its Many Litigants

Taking a small first step to appease the record industry and eradicate its legal troubles, Napster Inc. said Wednesday it had reached an out-of-court settlement with independent record label TVT Records.

The agreement crosses off one of Napster’s numerous litigants and provides a much-needed vote of confidence from the music world.

Financial details of the settlement were not disclosed. Under its terms, TVT now will allow the master recordings and musical compositions it owns or controls to be used for file-sharing on the Napster service.

New York-based TVT, which has an eclectic roster of artists and is known for its soundtracks, filed its copyright-infringement suit against Napster last June.

Despite the settlement, Napster continues to wrangle with its core problem, which stands between it and the industry’s major labels. The Redwood City, Calif.-based company not only must convince the mainstream record companies of its good intentions but also must prove to label executives and music publishers that it has a business model that will generate profits from its song-swapping venture.

The record industry has been thrust into the midst of a legal and philosophical war over the online service, which currently allows people to freely trade digital copies of songs.

Hank Barry, Napster’s chief executive, said that talks with the other labels are continuing. But company officials have refused to discuss details about either a new service expected to launch by summer or the business model behind it.