Sony, Vivendi To Battle Napster with Fee-Based Music Site

Vivendi Universal and Sony Music, two of the most dominant players in the music industry, said Thursday they will soon compete directly with Napster by launching a digital music site of their own.

Known as Duet, the site will be based in San Francisco, California and offer both subscription and pay-for-listen options.

The site intends to give users legal access to nearly half of all of the world’s music, the two companies said, and will eventually offer the music of other record labels.

The news that the site is in advanced stages of development, first told to a French newspaper by executives from Paris-based Vivendi, came on the same day that the music industry responded coolly to a reported US$1 billion settlement offer from Napster.

Napster and its new business partner, Bertelsmann, are hoping to settle long-standing copyright infringement lawsuits with Sony, Universal and two other record labels that threaten to shut down the wildly popular music-swapping site. In an effort to settle the suits, Napster recently offered the record labels up to US$1 billion in licensing fees to be paid over five years.

Cold Shoulder

Vivendi chairman Jean-Marie Messier said that the companies will consider working with Napster, but only after the free music-sharing network has completed its planned transition to a pay-for-use site, which reportedly could happen as soon as this summer.

“We often thought that an alliance with Napster would be the only possibility,” Messier told Reuters. “But I don’t believe it is right to give the advantage to pirates.”

The Vivendi-Sony partnership is also reportedly talking with other digital music sites, including MP3.com, about possible alliances. However, those talks are still in the early stages, Messier said.

Vivendi acquired Universal in December through its merger with Seagram.

Labels Take Action

Sony and Vivendi’s efforts have won applause from analysts, many of whom have long urged record labels to stop fighting digital music downloads and start competing.

“Ever since Napster’s launch, the labels demonized file sharing,” Aram Sinnreich, an analyst with Jupiter Media Metrix, told the E-Commerce Times in November. “Record labels realized the potential that this had with consumers and they are now finally starting to do something about it.”

Napster, meanwhile, still faces possible shutdown, as a judge is currently revamping an injunction that could at least prevent the swapping of copyrighted music. Napster and the record labels that have sued it have also reportedly used a court-appointed mediator in an effort to settle the litigation.