Napster Scores 2 Deals With European Groups

Napster Inc., the embattled online song-swapping service, enlisted new European allies Tuesday when it struck licensing deals with two large groups of independent record companies.

The deals cover songs by such popular artists as Moby, Tom Jones and Tricky, but they cover only a portion of the rights needed before Napster users can legally trade those songs. In addition, the deals don’t kick in until Napster begins a membership service that requires users to pay a monthly fee.

That service, due this summer, will replace the free version of Napster. The free version has come under increasing legal restrictions as Napster struggles to comply with a federal court injunction that bars the company from helping users swap copyrighted music.

Analysts said the deals help Napster add depth to its membership service, but most users also want songs from the five major record companies: Vivendi Universal’s Universal Music Group, Sony Corp., Bertelsmann’s BMG Entertainment, EMI Group and AOL Time Warner Inc.’s Warner Records. The latter three have agreed to provide songs to Napster’s new service, but only if they’re satisfied that copyrights will be protected.

“It’s not a big step,” analyst P.J. McNealy of GartnerG2, a research and consulting firm, said of the European deals. “It helps round out the catalog a little bit more, but they’re still missing two of the five [major record companies], and they’re not guaranteed the other three at this point.”

Officials declined to reveal the terms of the deals with the Assn. of Independent Music, which represents about 500 record labels in Britain, and the Independent Music Cos. Assn., which has about 1,500 European members.

The main shortcoming of the agreements is that they do not include the music publishing rights associated with the labels’ songs. Alison Wenham, chief executive of the Assn. of Independent Music, said another Napster deal with a group of British publishers was close to being completed, but that deal may not cover the U.S. rights to some of the artists’ works.

As a consequence, Napster users in Britain may have access to some songs that U.S. users cannot download or swap, she said.

A recent deal that Napster struck with MusicNet, the online distribution service backed by BMG, EMI and Warner, also lacks the accompanying publishing rights. So does Napster’s deal with independent label TVT Records.

Another issue for consumers is that the new Napster service probably won’t let them copy songs onto CDs, making it difficult for them to enjoy the songs in their cars and living rooms. That’s a problem, said Phil Leigh, an analyst for Raymond James Financial Inc., because consumers “want [music] to be portable.”