Napster signs multi-label agreement

Napster grassroots file sharing fans can rest more easily.

Music-swapping Web site Napster signed a worldwide licensing agreement Monday with the United Kingdom’s Association of Independent Music and the Independent Music Companies Association to provide music for its new subscription service, which will launch later this summer. The independent record labels will join major record labels BMG, EMI and AOL Time Warner, which will distribute their music to Napster’s new site through their MusicNet subscription service.

Shawn Fanning, who developed the original Napster service, said he is grateful that independent artists and labels are now showing leadership when it comes to using technology to make music more accessible.

The deal covers music from over 150 record companies and includes tracks from Tom Jones, Moby, Ash, Stereophonics and Paul Oakenfold.

“It puts the focus back on the music itself rather than the creative packaging or clever marketing,” Oakenfold said in a statement. “It has at long last become legitimate and the artists and their labels will get paid.”

Though the agreement does not cover third-party publishing rights, it will give Napster users a greater choice of music and give independent labels a chance to widen their distribution threshold.

“We should treat all digital distribution as an extension of our retail sales,” Guy Holmes, chairman of Gut Records, said in a statement. “We have to embrace it since it is a percentage of our future revenue.”

A federal appeals court rejected Napster’s plea on Monday for a rehearing pertaining to a March ruling barring it from trading copyrighted material. The ruling stemmed from a lawsuit filed against Napster by the Recording Industry Association of America. Napster now faces a full trial in RIAA copyright infringement suit. If the record labels win the case, it could mean the end for Napster, which would face millions of dollars in damages.

Even with its new services, Napster will still have to secure publishing rights for its material and make sure its filtering software meets the music industry’s standards, minimizing outstanding legal issues. An injunction barring Napster from offering its songs while the case was in process has already significantly reduced the number of users. Record companies also must inform Napsters of the names of MP3s files they want removed.

Josh Ayala, the new media director at U.S. independent Sub Pop Records, said the European agreement is a positive one for Napster, whose material has become limited since the company started its filtering process a few months ago. Sub Pop has asked Napster to remove 50 of its 500-plus releases from the system, though the filtration process and decline in users has made nearly the entire catalog unavailable for download, Ayala said.

“We support promoting artists and think it is important that fans have access to the material,” he said. “However, Napster is a gray area for consumers right now.”