However, there is no sign that the other four major recording companies suing Napster will follow BMG’s example, although both Napster and Bertelsmann said they will seek support from others in the music industry to establish Napster “as a widely accepted membership-based service and invite them to participate actively in this process.”
All parties in the legal action are awaiting an appeal court’s decision on whether or not the site should be shut down for contributory copyright infringement.
The BMG lawsuit will not be withdrawn until Napster successfully implements the subscription-based service at which time BMG will make its full music catalogue available to subscribers. In addition, Bertelsmann’s new e-commerce group, BeCG, will provide a loan to Napster to enable development of the new service and it will hold a warrant to acquire a portion of Napster's equity.
Andreas Schmidt, President and CEO of BeCG, said:
"For recording artists and songwriters, we hope to realise Napster's full potential as a promotional vehicle while protecting their interests. For the recording industry, we are looking to take a positive and forward-looking approach with a membership-based service that complements other forms of music distribution."
Shawn Fanning, founder of Napster, added: "I am excited that Bertelsmann appreciates and values the uniqueness of the community Napster users have built.” Napster claims to have a community of 38 million users.
Hilary Rosen, President of the Recording Industry Association of America which has been representing the record companies in their action against Napster, said:
“Today’s announcement does not bring an end to the court case. There are multiple plaintiffs in addition to BMG; and BMG itself has said that it won’t withdraw its complaint against Napster until they actually implement a legitimate business model. And frankly, it is important for everyone – Napster included – that the ground rules of the Internet music business be established once and for all. The courts need to make clear that, contrary to what Napster has been claiming, companies like Napster do need to get permission before they launch businesses built on other people’s creative property.”