Napster is nothing if not resilient.
Despite receiving another apparent death blow on Monday, the file-trading company managed another nice rebound on Tuesday, even as a potential rival made some noise of its own.
Napster and FLIPR, a Canadian startup, have both reached agreements that will allow European organizations to distribute music separately on their networks.
Napster, whose request for a rehearing of its court trial was denied on Monday, signed a deal with the Association of Independent Music, a group of 400 independent labels including Beggars Banquet and Ministry of Sound. AIM tried to develop licensing parameters for Internet radio stations last August.
"This is nothing short of a global revolution for musicians and music lovers," said AIM's CEO, Alison Wenham. "It proves that the independent record labels of Europe mean business and helps secure Napster's future at the forefront of the digital distribution of music. It means that anyone, anywhere in the world with access to a computer and a phone line can legitimately enjoy the most exciting music around."
The deal gives Napster access to hundreds of thousands of tracks in Europe, with plans to expand the rights worldwide.
However, FLIPR managed to accomplish something that few organizations -– peer-to-peer or not -– have been able to pull off: to convince a music publisher to sign off on a deal.
Hoping to build a service that focuses on hip-hop and electronica, FLIPR signed a deal with SODRAC, which handles licensing rights in Canada for the likes of Cherry Lane, Editorial Avenue and many more. The rights organization represents millions of international titles.
"The goal is to establish a relationship with the independent music culture," said Daniel Webster, FLIPR's executive director of product development. "Our belief is that file-sharing is going to develop into the same kind of service as radio."
They even control Canadian rights for music from Sony and Universal, two major labels that recently created a music subscription service called PressPlay. PressPlay will be distributed through Yahoo when it goes live later this year.
More impressive is the fact that this network won't be bogged down with digital rights management systems that American record labels have demanded.
"We don't believe that the behavior over the last year indicates that DRM is how the public is going to use these types of file-trading services," Webster said.
That doesn't mean that users will be trading their music in complete anonymity, though. Each song being traded on the network will be marked with a unique ID so that it can be tracked as it is distributed from person to person, allowing music labels to know exactly who is listening to their music.
The concept is called super distribution and has been championed by such digital rights management companies as InterTrust and Microsoft as a way to get music fans to market their favorite artists.
In the DRM version of super distribution, files are wrapped with a digital lock that can only be opened once the content has been paid for. If the first user then allows the song to be downloaded by someone else, the recipient would also have to pay. That would be done by logging on to a retail site that provides the file's key, for a price.
The FLIPR system won't force music consumers to pay for music that they have downloaded from other people on the file-trading network. Instead, the company hopes to make money by charging subscriptions, pulling in advertising and sharing revenues with online retailers.
Although still in a semi-private beta-testing period, the Canadian company will start paying 4 cents per song download beginning next month, split equally between the songwriters and music labels.
Industry pundits have scoffed at many publishing licensing deals signed by companies like Musicbank, claiming the costs of paying for the licenses would far exceed any actual revenues that could be generated by such services.
Investors have been shy about throwing money towards such systems as well, forcing Musicbank to shutter its service while still in beta testing when it failed to raise enough funding to continue operations.
At its height, Napster had 70 million unique users who were estimated to have traded over 3 billion files a month. If Napster had paid out on a similar scale, they would have faced a $120 million bill just for the publishing rights. If the FLIPR network takes off, it could face staggering operation costs.
Webster said that its subscription service would run somewhere between $3-$20 per month.
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