Napster Settles With Artists, Music Publishers

Napster, the controversial online music service, has reached a settlement in principle in the class-action suit launched against it by music publishers and songwriters.

In a news conference held late Monday, key executives on both sides of the dispute announced an agreement for songwriters and music publishers to license their music to Napster. The deal now goes before Chief Judge Marilyn Hall Patel of the United States District Court for the Northern District of California for her approval. All the plaintiffs in the class action, as well as the National Music Publishers Association Board of Directors must also sign on to the deal.

Under the settlement, Napster must pay $26 million in settlement of damages for past, unauthorized uses of music to music creators and copyright. Napster must also pay an advance against future licensing royalties of $10 million, according to the rules of the federal Audio Home Recording Act. The Harry Fox Agency, Inc. the licensing subsidiary of NMPA, will license rights, collect and distribute royalties, and monitor compliance under the Agreement, on behalf of the copyright owners.

“This landmark agreement marks a huge stepping stone toward building a digital music marketplace and were pleased to have played such a key role in moving the market forward,” said Napster CEO Konrad Hilbers, in a prepared statement.

The parties thanked several members of Congress for their advice and support throughout the negotiations, including Senate Judiciary Committee Chairman Patrick Leahy (D. Vt.), Ranking Minority Member of the Senate Judiciary Committee Orrin Hatch (R. Utah), and the Members of the House Judiciary Committee.

Napster plans to launch a new membership-based service this fall with recordings from hundreds of independent record labels. Napster will also offer a separate collection of music from the BMG, EMI and AOL/TimeWarner labels through MusicNet.