New Napster plays for beta audience

After months of silence, Napster Inc. is set to play its new digital music subscription service to a limited audience of beta testers Thursday, as the previously free peer-to-peer file-swapping service readies itself for its legal launch.

The Napster beta will be tested by some 20,000 members who will get a first-hand peek into the new service, which has been completely revamped since the free-for-all version was knocked offline last July amid copyright infringement complaints. But unlike the old Napster, which the company claims had at its height some 60 million users swapping almost any song imaginable, the beta users will have access to just 1,500 songs.

The subscription service retains Napster's peer-to-peer platform, but also pays dues to the artists and labels who make the music, giving them royalties out of the still-undisclosed monthly subscription fees.

For those not on Napster's beta tester list, the company recently posted a preview of the subscription service on its Web site, demonstrating the software's security layer, playlist organizing capabilities, instant messaging features and new look and feel. The new service also includes a genre directory, an expanded library of management tools, parental-control features, the ability to set up family accounts, a revamped music player and self-registration for artists and other rights holders.

Napster is now focusing its attention on broadening its music catalog for launch, which is expected to take place this quarter, the company said. It also has sealed licensing deals with numerous independent labels and has jumped into bed with MusicNet, the music subscription service backed by RealNetworks Inc., AOL Time Warner Inc., Bertelsmann AG, and EMI Group PLC., which launched in December.

Despite its alliance with MusicNet, Napster is seeking independent contracts with each of the Big Five labels, which hasn't proven an easy task, Chief Executive Officer (CEO) Konrad Hilbers has said.

"If Napster expects to tap into the passion of music lovers, we must obtain major label content, and this remains our greatest obstacle," Hilbers said while speaking at the Future of Music Conference in Washington, D.C. earlier this week.

Hilbers sparked a maelstrom of debate in the industry when he told conference attendees that the government should ensure that the labels engage in fair licensing practices.

"The government has the obligation to step in to set standards that promote competition and benefits to consumers, especially in the area of copyright," said Hilbers, according to a transcript of his speech released by Napster. "If no agreement between right holders and new, independent distribution initiatives can be achieved in the short term, Congress will have little choice but to consider compulsory licensing of sound recordings."

While Napster struggles to gain content, it is busy putting the finishing touches on its new technology platform.

The company announced Thursday that it had selected Portal Software Inc.'s Infranet customer management and billing software for its subscription service. The software will allow Napster to ensure accurate royalty payments, Portal said.

Also Thursday, Napster said that it had chosen Counterpoint Systems Ltd. for its rights administration technology. The technology will track songs as they are shared through Napster so that royalties can be calculated and distributed to artists and rights holders.

Although Napster still retains wide name recognition, it remains to be seen if it can corral its once millions-strong legion of users into paying for the music they became accustomed to enjoying for free.

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