HITS Daily Double
"I'm convinced we can introduce in June or July of this year a subscription model with a real working digital rights management system."
——Bertie chief Thomas Middelhoff


Bertelsmann Announces Plans For June Or July Unveiling, Napster’s CEO Surprised By News
German uber-corporation Bertelsmann announced today (1/29) that it was planning for an early summer introduction of a subscription version of popular (and erstwhile "outlaw") file-sharing service Napster.

"I'm convinced we can introduce in June or July of this year a subscription model with a real working digital rights management system," Bertelsmann Chief Thomas Middelhoff told the World Economic Forum in Switzerland. A subscription form of Napster has been in the works since Bertelsmann hooked up with Napster in October (hitsdailydouble.com, 10/31).

The announcement came as a bit of a surprise to interim Napster CEO Hank Barry. "We haven't decided on a time schedule at all," Barry said.

Bertelsmann's Andreas Schmidt, CEO of the company's e-commerce group, again dropped hints that other major music publishers would be joining the service, but his statement was more speculative than factual.

"We're getting a very positive reaction," Schmidt said. "We are keeping the opportunity open for their input and to join forces with us in Napster, and I'm very hopeful that in the next couple of weeks we will get some results."

Since Bertelsmann announced its partnership with Napster, talk has swirled around the possibility of one or more of the remaining four major labels joining the partnership. But doubts have surrounded such speculation. Napster's Barry was non-committal on the issue, saying only that he was "hopeful" such a possibility could become reality.

Middelhoff was confident that many of Napster's 57 million registered users would be happy to pay for a subscription service. An internal survey of 25,000 Napster users showed that 70% would be willing to do so.

Middelhoff reiterated Bertelsmann's decision to work with Napster rather than fight it was based on accepting the changing face of the music industry, especially regarding how the Internet was impacting it.

"The music industry was not ready to handle this new consumer behavior," Middelhoff said, referring to peer-to-peer file-sharing. "We decided to speak to [Napster] and develop a legitimate business model."

"I don't think anyone will say they are against it," Schmidt said. "If you find the right terms and business model, I don't think anyone will stay our of this peer-to-peer file-sharing network."

No one from either company could say what the price for the paid service was going to be.