New Chief: Napster Alive and Well

NEW YORK — Former Napster users and music industry observers have lately been wondering whether the online file sharing company is down for the count.

But Napster’s new chief executive, Konrad Hilbers, said Napster is alive and well and is preparing to woo back those users when it launches a fee-based service later this summer.

“You can’t kill a brand name that fast, and Napster is a legend,” Mr. Hilbers said in a meeting with journalists at an online music conference hosted by Jupiter Media Metrix and Billboard Magazine.

Napster announced Mr. Hilbers’ appointment Tuesday. The former chief administrative officer of Bertelsmann AG’s BMG Entertainment unit and a veteran of AOL Europe, a unit of AOL Time Warner Inc. (AOL), Mr. Hilbers replaces interim Chief Executive Officer Hank Barry, who remains on Napster’s board of directors.

Messrs. Hilbers and Barry appear to have their work cut out for them.

Former Napster users have scattered after the company took down its service earlier this month to comply with court rulings in its ongoing legal battle with the recording industry. Many have begun using other file-sharing services, such as Aimster, Audiogalaxy and LimeWire. Use of some of these has grown rapidly, according to Jupiter Media Metrix research. Unique visitors to Audiogalaxy, for example, rose 78% from March to May.

Some observers have questioned whether Napster users, once accustomed to sharing all sorts of recordings at no charge, will be willing to pay for Napster’s new service.

But Mr. Hilbers said that Napster’s own research shows that not all of the approximately 90 million people who have downloaded Napster’s file-sharing software are “college kids” who don’t want to pay for anything.

Mr. Barry added that such research shows a broad range of people have downloaded the software, including some who would be willing to pay a fee to use the new version of Napster, which will license copyrights of a range of recorded music and filter out copyrighted works Napster has not licensed.

Napster has been working hard nailing down licensing agreements for a wide variety of copyrighted music for its fee-based service.

The company has agreed to become a distributor for MusicNet, an online music joint venture of AOL Time Warner, Bertelsmann AG, EMI Group PLC, RealNetworks Inc. (RNWK) and Zomba, the largest independent record company.

MusicNet, which plans to begin operating in late summer, will offer music from AOL Time Warner’s Warner Music Group, Bertelsmann’s BMG, EMI Recorded Music and Zomba’s various labels, which included Jive Records.

Napster has worked out other licensing agreements with Germany’s Edel Music AG, America’s TVT Records and two organizations that represent hundreds of European independent record labels.

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