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Show WEDNESDAY, FEBRUARY 28, 2001 THE SUN News Napster offers to pay record companies $ I billion By Tribune Media Services SAN FRANCISCO Trying to stave off extinction without driving off all its users, online music powerhouse Napster Inc. announced an offer to pay record companies $1 billion over five years for the right to include copyrighted music in a new, version of its network. Company executives and Thomas chief of media conglomerate Bertelsmann, implored the labels to suspend their legal assault while all the parties worked out a deal. The offer, which both fans and critics see as a desperate gamble, comes asftie company and its users nervously await a preliminary injunction from U.S. District Judge Marilyn Hall Patel in San Francisco. That injunction could force Napster to block access to the most popular songs, eviscerating the current version of the service. The major labels reacted coolly to Tuesday's offer, although they didn't rule out a deal with Napster if their concerns about unauthorized copying were met. "We would not support a proposal that allows Napster to continue to operate in the current unlawful form while developing a business model," said Dick Parsons, chief operating officer of AOL Time Warner Inc. 'They need to shut down, then we can talk." Bob Bernstein, a spokesman for Vivendi Universal's Universal Music Group, said: "It is Napster's responsibility to come to the creative community with a legitimate business model and a system that protects our artists and copyrights. ... Nothing we have heard in the past and nothing we have heard today suggests they have yet been able to accomplish that task." A spokeswoman for the record labels' trade association dismissed Napster's offer as music-swappin- g f, a public-relatiogimmick. 'This is a strategy to put public pressure on the (record) companies, rather than have meetings with the companies they're trying to deal with," said Amy Weiss of the Recording Industry Association of America. Industry and legal experts questioned how Napster could raise the promised $200 million a year, given that few of its current members are expected to sign up for the new version. Napster's model assumes that more than 98 percent of the 64 million registered users will abandon the service in the face of the new fees, which are tentatively set at $3 to $10 per month. If Napster loses 98 percent of its current users, it will only have about a million people paying for the service, said Phil Leigh, an analyst at the Raymond James Associates Inc. investment bank in St. Petersburg, Fla. face-to-fa- "At $10 a person, that's only $120 million a year," said Leigh, assuming the monthly charge would be at the high end of $10. They're either going to have to convince more people to stay with the service or draw revenues from other sources." The appeal of the new service will depend heavily on Napster's ability to attract the major label groups. None have signed on so far, although Bertelsmann-owne- d BMG has said it will work with the new Napster service if it meets BMG's criteria for security. "For this to work, Napster has to have everything, from any MP3 file you want to terrific customer service," said Gene Hoffman, chief executive of EMusic.com, an online rival. "If it has everything, then people will pay. Right now, it doesn't have everything." A hint of possible help came from EMI on Tuesday, which has struck more deals with online music companies than any other major label group. 'We're open to any and all models that help our artists make a living and help our bottom line," said Jay Samit, a senior vice president at EMI. "It sounds on the surface that at least somebody's thinking about ways of compensating everybody in the food chain." Napster Chief Executive Hank Barry said the company will go out of business if it can't raise the $200 million in promised payments. But if the company succeeds wildly, the current offer still caps payments to the labels at $200 million. That puts the labels in the awkward position of having their income from Napster capped but not the royalty payments they owe artists and songwriters, who typically collect each time a recording is reproduced. Under the proposal, the five major label groups would divide an annual kitty of $150 million, with independent labels and unsigned artists dividing an additional $50 million a year. The deal would be the largest offer ever made for music licenses, Napster officials contended. The new service, which Barry promised to have ready by July, would use new software on users' computers to add a layer of security to the system. Among other things, the software would restrict the fidelity of recordings and bar users from transferring song files to CDs or portable devices unless they paid extra fees. Still to be resolved is whether users would lose the ability to play the files they download from each other if they stopped said he paying their monthly fees. Barry would not like to do that, but that issue is open for negotiation with the labels. Got an opinion? Write letter to The a dropped off to NPZ 125, or Sun: Letters to the editor can be to thedixiesunhotmail.com 5 'ClLi45fClTIbl:, Illinois offers class in Oprah studies URBANA, 111. - Every Thursday, history students file into a stately old building here at the University of Illinois for classes about Alexander the Great, the Federalist period and ... Oprah. -- Oprah? Yes, Oprah; specifically, "History 298: Oprah Winfrey, the Tycoon." Tenured Professor Juliet E.K. Walkn er, a specialist in the history of business, introduced the course this semester. Officials at the University of Illinois said the course is at believed to be the first of its kind in the nation. The unusual topic has stirred enthusiasm among some, skepticism among others. "My department chair told me a member of the board of trustees called," Walker said, "and wanted to know what kind of education was going on up there in the History Department with a course like "Oprah."' To such inevitable questions, Walker has these replies: Yes, this is a serious academic course, complete with dense, scholarly texts to read and long research papers to write. No, students aren't getting course credits for watching a talk show. And yes, Oprah is a historical figure, even though she is only 47 and quite alive. And so, in a Gregorian Revival building constructed in 1940, several years before Winfrey was bom, students classroom to anagather in a fourth-floo- r lyze her success in the context of the country's social and economic history. 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