Napster's $US1 billion offer to settle ongoing litigation in the U.S. is only applauded by its present backers. Adversaries are telling the company behind the popular music-swapping service to act like a responsible business and stop its media offensive.
"We are disappointed that Napster has resorted to a tactic that is little more than a public relations gambit," said a spokeswoman for the International Federation of the Phonographic Industry (IFPI), which represents manufacturers of sounds recordings.
The IFPI wants Napster to pull copyrighted files off its service -- effectively shutting it down -- before any negotiations can start.
"The company should comply with the court order and cease offering infringing files so that the appropriate climate is created for discussions about licenses and legitimate business models," the spokeswoman said.
The IFPI is affiliated with the Recording Industry Association of America (RIAA), which brought the cases against Napster on behalf of five major record labels. RIAA's president Hilary Rosen blasted Napster's proposal even before the company outlined the details on Tuesday.
"Stop the infringements, stop the delay tactics in court, and redouble your efforts to build a legitimate system," Rosen said in a statement, adding that Napster should talk to the record companies directly instead of through the media.
EMI Group PLC, one of the labels fighting Napster, agrees. "If [in the end] there is a compelling and convincing business model EMI would be interested," said Amanda Conroy, a spokeswoman.
Of Napster's other challengers Warner Brothers Music Group declined to comment. Universal Music Group, and Sony Music Entertainment did not return calls.
Napster's partners not surprisingly approve of the offer to buy off litigation.
BMG Entertainment Inc., one of the five major record labels originally suing Napster, signed a surprise settlement with Napster in October 2000 and invested a reported $50 million in the service.
"We believe the new Napster proposal announced today is a positive step that will encourage the music industry to work with Napster," Rolf Schmidt-Holtz, president and chief executive officer of BMG Entertainment, said in a statement.
Edel Music AG, a German record company that teamed up with Napster and Bertelsmann AG, the parent of BMG Entertainment, earlier this month, sees the offer "a step into the real future of Napster."
"The offer makes sense because Napster makes more sense if all the record companies agree," said Andre Schirmer, edel's communications director. "Napster is nothing more than a record shop with an incredible selection, we believe Napster will be the most important online music platform." Napster's opponents have repeatedly compared the service to stealing from a music store.
Shirmer said edel worked with Napster and Bertelsmann on the new model for the song swapping service. Napster shared some details of this new model on Tuesday. The company intends to charge up to $4.95 per month for limited downloads and up to $9.95 for unlimited downloads. The new Napster will make payments to record labels, songwriters, and independent artists and is scheduled for launch in mid-2001.
Not all of Napster's users are getting ready to pull out their wallets, although a survey of 20,000 Napster users conducted in December by Webnoize Inc. showed that a large majority is willing to pay up to $15 a month for the music download service.
"I won't pay as long as there are free alternatives," said a Dutch Napster user, pointing to software like Gnutella which also allows sharing files but is less user-friendly than Napster.
Users in Napster's own forums on Napster.com have similar opinions. "All I have to say is that there are a lot of places on the Internet to receive free downloads of MP3's," wrote one. Others are more compliant: "Your new business model sounds great," is another user's opinion.
Next step for Napster is to sign deals with the labels. Together with its partner Bertelsmann eCommerce Group (BeCG) Napster is now in negotiations with record companies, said a spokesman for BeCG.
One analyst said Napster and its partner are bound to fail.
"The record industry is paranoid. A label will not buy into a competitor's technology," said Andy Greenman, senior analyst at the Yankee Group Europe.
Napster's heritage is another thing that is working against the company.
"Napster's creator Shawn Fanning has had a rather anarchistic way of taking on the music industry. I don't see the industry taking him on as their savior," Greenman said.