Napster Launches New Version

Napster Inc., once the copyright-flouting bad boy of the music world, is relaunching its online song-sharing system today as a subscription service that pays for music and deters piracy.

The launch is limited to an invitation-only trial with about 20,000 participants, who will receive the service for free. The service will have a familiar look and feel but far fewer songs to download.

In the new version, the only music available will be songs that record labels and music publishers have authorized for downloading. Redwood City, Calif.-based Napster has deals with many independent labels and publishers but not with the five major record companies responsible for the vast majority of popular music.

Chief Executive Konrad Hilbers said Napster plans to make its new service available to all comers by the end of March. It also hopes to have deals with the major labels by then, he said, adding that he has not decided whether to broaden the service without them.

Napster needs songs from all five majors if it wants to appeal to the mass market, said P.J. McNealy, research director for the technology consulting firm GartnerG2.

“Napster faces exactly the same challenge as any other music service,” he said. “The Napster brand is not enough.”

The major record companies are suing Napster over its free service, which enabled users to find and copy songs from one another’s computers without paying for them. U.S. District Judge Marilyn Hall Patel ordered Napster in July to shut the service, which attracted more than 10 million users a month at its peak, until it could stop users from making unauthorized copies of the labels’ songs.

Unable to meet that test, Napster has not revived the free service. The new version still is based on users copying music from one another’s computers, but Napster’s software won’t let them find songs that are unauthorized for sharing.

Shawn Fanning, Napster’s inventor and chief technical officer, said the company built the new software virtually from scratch. The result preserves the original Napster’s easy-to-use tools for finding songs while improving the software for sending instant messages, chatting online and perusing songs other users have collected, the company said.

Many of the songs on the new version will have electronic locks, preventing them from being copied or played by nonsubscribers, recorded onto a CD or moved to a portable audio player. Napster’s system also prevents songs from being traded without authorization, and it records each download to calculate royalties.

Because the original version allowed users to share all the MP3 files on their computers, the service made available a huge and diverse collection of studio recordings, live music, rarities and outtakes. The new version will be unable to offer such breadth unless it gets a favorable ruling from the courts.

Both Napster and the record companies have challenged the order in the U.S. 9th Circuit Court of Appeals. Although the labels have asked for tight limits, Napster wants the ability to let users share all music that has not specifically been ruled out by the copyright owners.

Napster also wants to encourage artists who hold their own copyrights to distribute their music through its system. Hilbers said the company will put 55% of its subscription revenue into a pool that copyright holders will split according to how often their songs have been downloaded.

The monthly subscription fee is tentatively set at $5 to $10 for 50 downloads, Hilbers said. The company hopes to let users download more songs per month for an extra fee, but some of the major labels want to keep a low limit in place, he said.