Bertelsmann grabs for Napster cash

German media giant Bertelsmann breaks cover with initiatives to exploit commercial potential of Napster's 38 million users.

          Bertelsmann has moved with two initiatives designed to exploit the commercial potential of Napster's 38 million users after joining up with the renegade file sharing service Napster 10 weeks ago.

          First, Napster installed a "buy button" on the latest version of its software. Clicking it takes users directly to the Bertelsmann-owned CDNOW retail site. Napster COO Milton Olin said the company was "pleased to offer the Napster community the opportunity to easily purchase music they discover on Napster".

          Second, Napster has begun promoting a new single – I Did It by the Dave Matthews Band – on its home page. The single is from a new album being released in February by RCA, one of the record labels owned by Bertelsmann Music Group (BMG).

          The two initiatives mark the start of Bertelsmann's attempt to turn fans of free tunes into legitimate, law-abiding music-buyers. If the initiatives are successful, they could also go a long way to support Napster's legal position in the US. They may even reassure the recording industry that file sharing has a place in the commercial record business.

          The major labels' suit against Napster, founded by Shawn Fanning, is set to go to trial before a US Court of Appeals this spring.

          Napster CEO Hank Barry has long argued that Napster users access the service to "sample new music that they in turn purchase". Strong global record sales over the past year have lent some weight to his assertion.

          If successful, these tactics could signal a new way to promote music online. The "big five" major record labels – Universal, Time Warner, Sony, EMI and BMG – have finely-tuned offline promotional operations that are very efficient at getting records on shelves and on radio play lists. They are still casting about, however, to find a strategy that works on the internet.

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