Word: bertelsmann
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...world was until recently a happy place. With its impressively easy-to-use format for sharing free music files, and with more than 50 million enthusiastic users, Napster was clearly one of the most important things to happen on the Internet. When it joined forces with German media giant Bertelsmann last year, Napster seemed to be headed toward respectability--and profits. But there has always been a catch: the music industry, and many performers, insist that what Napster calls music "sharing" is in fact nothing more than music stealing...
...Napster hopes to survive, it is going to have to develop some new screening technology fast. Late last week the company and Bertelsmann announced that they have begun to do just that. They have devised a new form of digital-rights management architecture that will, for the first time, let Napster keep track of--and impose restrictions on--music shared over its system...
...putting a concrete offer on the table," Hank Barry, Napster's chief executive, said, adding that talks along these lines with the record companies have been proceeding apace since last summer. Indeed, in November, Napster cut a deal with Bertelsmann to finance just such a transformation to a pay-for-play model...
...What next? The RTL stock swap left intact a cash horde of more than $10 billion, which Bertelsmann earned from its sale of stock in AOL after the online service announced its merger with Time Warner (TIME's parent). Though global in outlook, Bertelsmann has relatively few broadcast and Internet assets in North America, so the German giant could soon be trolling for bargains among companies that have been bloodied by the precipitous fall of the U.S. high-tech stock market nasdaq. The RTL deal also provided outsiders an intriguing glimpse into Bertelsmann's finances. Company officials...
...Mohn family, which controls the company through a Bertelsmann foundation, evidently now thinks it makes good business sense to have a portion of its shares traded on the stock market. But that doesn't mean they are surrendering control or expecting to change what they describe as Bertelsmann's?"unique corporate culture." While GBL gets two seats on Bertelsmann's supervisory board, the firm had to settle for just 25% of the voting rights, .1% less than a blocking veto. Even Bertelsmann is not ready to move that fast...