Shady Character Goes Legit

Napster, in the eyes of record companies and most artists a synonym for the biggest larceny in the history of the Internet, is going legit. Rather than enabling its 38 million or so users to steal music, Napster has signed a deal with Bertelsmann, the German owner of the major music label BMG, to begin converting its music-swap connection from a take-what-you-want commune into a paid online subscription service.

The alliance has many barriers between it and profitability. Still, it is a good idea because it aims to find legitimate use for a clever and phenomenally popular technology that risked being litigated out of existence. If the plan works, those who make music will get paid for it and the listening public will have legal access to a new, cheaper source of recorded music.

By signing the deal, Bertelsmann broke ranks with the rest of the music industry, which has been trying to put Napster out of business. The German publishing and music giant obviously sees potential in Napster’s ingenious file-sharing technology, which allows millions of users to swap musical collections on each other’s computer hard drives. In exchange for a stake in the San Mateo-based Napster, Bertelsmann will pay $50 million and make its huge music catalog available for Napster’s use.

Of course, not all Napster users will be willing to pay for what has been free, unfettered access to a virtually limitless music library. However, the $5 monthly flat fee that Napster’s chief executive, Hank Barry, has suggested might be low enough to take the fun out of stealing. Much will depend on whether other big labels, including Sony Music Entertainment, Warner Music, EMI and Universal Music Group, will license their recordings. Without their participation, Napster would be reduced to a distribution outlet for BMG records and lose even more popular appeal.

Also unclear is whether Napster will be able to monitor transactions and pay artists and their labels without making access too cumbersome for users. In its litigation with the music industry, Napster maintained that the accounting could not be done without ruining the file-swapping technology.

The deal, difficult though it is, provides a forward-looking solution to an intractable copyright infringement problem that litigation could not staunch. Other music recording companies should not reject it out of hand.