Freebies Fading as Napster Goes Commercial?

Money and legal pressure can make even the fiercest tiger change its stripes. Nearing the end of prolonged litigation with the music industry, Napster has begun to go commercial.

The brainchild of college student Shawn Fanning, Napster originated as a "peer-to-peer" audio file sharing system that let users upload and access music files on the hard drives of all connected users. Massive law suits by the music industry followed. In a case before the 9th US Circuit Court of Appeals, Napster's defense has been that it is an Internet service provider and therefore not liable for the behavior of its members, an argument rejected by Judge Marilyn Hall Patel.

Now the former bad boy of the free music movement will offer users the opportunity to buy the music they have been downloading for free. Napster announced its "music purchase option" as part of its latest file-sharing system, Napster Beta 9, on Thursday, January 11. "We are pleased to offer the Napster community the opportunity to easily purchase music they discover on Napster," said Napster CEO Milton Olin.

Napster is attempting to re-invent itself as a legitimate commercial music business, after having been granted a reprieve by an appellate court, which over-ruled Patel's order to shut down the company's Web site. Napster is linking users to CDnow, a division of Bertelsmann eCommerce Group. The Bertelsmann Group, an arm of the German media conglomerate that owns the record label BMG, wants to convert Napster's millions of free music fans into paying customers.

Napster is an excellent way for music lovers to preview music they wish to purchase, according to CDnow CEO Mike Krupit. "CDnow knows that members of the Napster community love music," Krupit commented. "This relationship completes the music discovery cycle for community members who sample music on Napster and want to add that music permanently to their music libraries." Napster's Beta 9 upgrade includes an instant messaging service, chat rooms, and song sampling. Bertelsmann arranged a warrant to acquire a stake in Napster and has loaned the company an undisclosed sum to develop a membership-based model that will funnel payments to copyright owners. Bertelsmann's BMG is still a party in copyright-infringement litigation begun against the startup late in 1999.

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