As the fight over digital musical copyrights moves into a new stage, song-swap service Napster said it is looking for a new ally – music publishers.
“I’m spending a lot of time thinking about publishing,” Napster chief executive officer Hank Barry told Reuters.
“We could get all the labels in the world on the service but we still couldn’t do anything without the publishing rights,” said Barry during a recent interview.
Barry echoed what many big label executives are grappling with as a growing dispute over publishers’ royalty rates threatens to undermine recently announced plans to launch commercial services as alternatives to Napster.
The major recording labels and music publishers, who own rights to underlying musical compositions, are at odds over on-demand or interactive music streamed over the Internet, which allows consumers to listen to whatever song they want whenever.
Napster, the popular song-swap service, has seen usage drop sharply to 150,000 new software downloads per day from its rate of 250,000 back in February due to a court order barring it from offering copyrighted songs as a result of a lawsuit by the big labels.
While the major music companies grabbed a lot of headlines with lawsuits against Napster and MP3.com over the past two years, the lines in the sector are now blurring as big labels like Vivendi Universal and Bertelsmann AG team up with online players like MP3.com and Napster, respectively.
The labels have aligned themselves into two online camps including MusicNet – a joint venture between RealNetworks, AOL Time Warner’s Warner Music, EMI Group Plc and Bertelsmann’s BMG – and Sony Music,and Vivendi Universal’s Duet subscription service.
As the sector buzzes with behind-the-scenes activity, the publishing debate continues to simmer. Many of the big music publishers are part of the same companies that own the labels.
NAPSTER TALKING, TALKING, TALKING
Admitting the user experience has changed for Napster fans, Barry said Napster was going full-speed ahead with compliance efforts and plans to launch a new, pay service by summer.
Barry said he was talking with many parties, including the big labels, technology companies, such as Microsoft Corp. and music publishers to bolster the service.
Stressing the importance of publishing rights, Barry said he sees big opportunities for subscription services even without big label content.
“Our internal research shows that a significant amount of users will pay for the new Napster service even without major label content. That makes music publishing really important,” he said.
“The new service is being built to enable all artists and songwriters to receive payments whether they’re on a major label or not,” he said.
Barry said the service would launch by summer.
Barry said he continues to talk with MusicNet to work out a licensing deal for its service once it goes public and is very interested in talking with Sony and Universal’s Duet.
“We’re always hopeful about licensing deals with MusicNet and Duet but we have nothing to announce right now,” he said.
“It’s hard for me to believe that things could move any faster (in this space). We’re just focusing on staying the course, complying with the injunction and talking with as many people as we can,” Barry said.
Napster’s overture to publishers comes as tensions rise between the big labels and publishers, but also as Napster itself faces a copyright infringement lawsuit by publishers.
“Obviously we have a class action on behalf of thousands of publishers against Napster, but it is quite clear that Napster appreciates the importance of publishing,” said Carey Ramos, an attorney for music publishers.
“In order for Napster to launch a legitimate service, they need a license from the copyright owners of songs,” he said.
Last week, the U.S. Copyright Office received comments from several parties and companies, including Napster, who sided with the National Music Publishers’ Association (NMPA) on several fronts.
Both Napster the NMPA urged the Copyright Office to reject calls by record labels to initiate a rule making procedure on the issue. The publishers said the labels had called for a moratorium on payment of certain royalties to songwriters and music publishers for use of their works over the Internet.
“Before the labels launch those services, they need to have our licenses and they could hold this process up from one to two years with the process they are requesting through the copyright office,” said NMPA president Edward Murphy, who confirmed he has held preliminary discussions with Napster.
Recording industry executives contend the publishers are the biggest stumbling block to creation of legitimate online music services.