BMG forms alliance with Napster

Once enemies, Bertelsmann BMG and Napster Iwill now form an alliance to develop a peer-to-peer file sharing service, the German company announced Tuesday.

          Once enemies, Bertelsmann BMG and Napster Iwill now form an alliance to develop a peer-to-peer file sharing service, the German company announced Tuesday.

          Bertelsmann's newly formed eCommerce Group, BeCG, and Napster have developed a membership-based service that will provide file-sharing capabilities that "preserves the Napster experience while at the same time providing payments to the rightsholders," the company said in a statement. Napster and Bertelsmann will seek support from others in the music industry to accept Napster as a membership-based service, the companies said.

          Once Napster implements the service, BMG will withdraw its lawsuit against Napster and make its music catalog available. Bertelsmann will provide Napster a loan to develop the new service. In a statement, Napster Chief Executive Officer Hank Barry said the alliance is the "right step" for Napster and the Napster community would benefit from the alliance with Bertelsmann.

          The Recording Industry Association of America filed suit against Napster on behalf of the five major record labels, including BMG, earlier this year alleging copyright infringement and asked for damages and an immediate stoppage of the peer-to-peer file sharing service.

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