Bertelsmann: Making music with Napster Pt II
Published: 07 Feb 2001 14:57 GMT
I think we are on a very good path right now. Obviously, the discussions with some partners are more intense than with others, and I'm very optimistic about this -- otherwise, I wouldn't have made those comments. It might be two or it might be three weeks. What I'm saying is that the message is that for some major issues, we have the right emphasis right now, but they seem to be very receptive right now. And it's now about nailing down how it's going to look like in detail.
Vivendi Universal's chief executive Jean-Marie Messier said they are not going to settle the Napster case until after the court decides because they learned from MP3.com that they can juice a lot of juice a lot out of this.
He made different comments at Davos [Switzerland], at the World Economic Forum. You have to take a look at the quotes. About two weeks ago, he gave a Business Week interview where he said, well, 'We think Bertelsmann was maybe a little bit too early.'
Too early in what?
Too early in cutting a deal with Napster. He said we really have to look at this and figure out how to make it work. And that's what you see over various comments taken from the announcement we made until today. You see a lot of progress. Obviously we'd like to see the progress go faster, but we have to take into account that it also means that entire corporations have to move their mindsets.
So you're saying that within two to three weeks we can expect to see other major labels signing on with you?
I haven't said major labels -- I said more settlements, as we have already delivered. TVT, which Napster settled, even if it's independent, shouldn't be underestimated because they completely went out of the lawsuit, they completely settled. I think that's a very good indication that the model we have developed and put on the table in the private discussions that Napster's pursuing is really working.
How far are you on the negotiations with the major labels? Are you guys coming out with equity terms?
There is a complete package with all the elements: that includes equity, the transfer management with regards to the security and the accounting, to the payment for the artists. So everything is tied together now.
A big question mark is security. What sort of technology are you using to secure these files, to ensure payment, and to make sure these files are not traded illegally?
I don't want to be too specific about it, only to the extent that I say our number one goal is that the user experience that a Napster user has today is not tampered with. I know that Napster looked at all different technologies out there. Very few of them have proven to be sufficient when it comes to the elements of ease of use. They're all highly, highly secure, but secure to the way that users can't handle. And we don't think this is the right approach.
This is not about the national secrets of the United States, which have to be secured from the Soviet Union. This is about music. There always has been a certain element about piracy around music, as of today even in the physical format. We believe that even in the future there will be some piracy around music, there's no question about it. And this will continue. That's true for all media.
The point is, again, how to adapt the current copyright situation and the current copyright law, which is not adjusted to the technology, to make sure that we build a structure for the new services as they evolve without depriving artists of their rights. That's critical. And what's also critical with regards to security is that we develop common standards for delivering content in a way that is convenient to the user but also ensuring payments to the rights holders.
[Bertelsmann chief executive] Thomas Middelhoff also gave a June or July time frame for a Napster subscription service. Are you confident of that timeframe?
Well, I think we do what is in our ability to keep up with the time frame, and we will see if we match it or not. But this is not just about a date. This is a very complex, very complicated build-out. As I said, it's legal, it's commercial, it's about legislation, it's about the business model itself, it's about defining new technologies.
Is there a subscription version of Napster right now that is being tested and could be introduced during that time frame?
I will not comment on what is internally done right now. I just want to tell you there's a lot of complexity associated with it because we have to work on all fronts. That's certainly much, much more than what you have to do when you normally develop a business model and start a new service.
Joel Klein and David Boies -- are you creating your own antitrust team to take down the next monopoly?
Well, I don't see a monopoly right now. Bertelsmann has done this consistently, where we try to get the best people available on the team, and Joel will be a tremendous help for us in that process.
How will you work with Klein? Will he be involved in the processes in terms of negotiating with the labels?
He will be closely involved, working with me on strategic issues as well as on legal matters. He's got a great deal of experience, and we're looking forward to working with somebody who knows the US legal system inside-out and who has a great deal of experience dealing with difficult situations.
AOL Time Warner doesn't want to say they are a media company, they don't want to say they are an Internet company. But yet many people have expressed concerns over the company that has been created in terms of future revenues that they want to tap television, broadband, and all media outlets. Is Bertelsmann driving toward the same goal?
We don't believe we need to control all the access. We don't need the pipes. We have strategic partnerships that guarantee access to the consumers, but what we believe is that we're going to create new products and new media formats across the various platforms. We will focus on media, the content production and delivery of this content across the platforms in the new formats.
Take me back to Pt I/ Making music with Napster
Take me to the MP3 Special
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