Napster Makes Public Business Model For New Service

San Francisco, CA. (PROTEXT) - Company Proposes $1 Billionover Five Years in Guaranteed Payments to Labels, Artists andOther Rightsholders, $150 Million per Year to Major Labels, $50Million for Independent Artists Napster today made public the business model that it has beenpresenting to major labels for the last six months in an effortto settle their dispute and end the industry's effort to shutNapster down in court. The proposal would provide guaranteed revenue of $1 billion tothe major labels, songwriters and independent labels and artistsover the next five years. Major labels would receive $150 millionper year for a non-exclusive license, divided according to filestransferred. $50 million per year will be set aside forindependent labels and artists to be paid out based on the volumeof files transferred. "As we have been saying in private meetings with the majorrecording companies and the RIAA for the last six months, Napsterhas a viable business model with solid revenue streams and we arebuilding the technology to make it happen," said Hank Barry, CEOof Napster, Inc. "We made public our business model andtechnology today in hopes that the recording industry will meetus at the table to come to a resolution that benefits artists andconsumers alike." "Bertelsmann chose to build a partnership with Napster inOctober, 2000 because of the tremendous value it creates forpromoting artists and building community," said Andreas Schmidt,president and CEO of Bertelsmann eCommerce Group. "The revenuepotential of Napster for the entire recording industry isunprecedented and it's time to start thinking towards the futureand figure out a way to leverage this potential instead of tryingto quell it. In the interest of the consumer and artists it'stime for the industry to lay down their arms." Napster's CEO Hank Barry described the membership model thatwill enable the company to make the proposed payments. Definitivepricing has not been set, but the model will have two tiers. Themodel includes a "Basic Membership" plan that would cost in therange of $2.95 to $4.95 per month with an as yet undermined limiton file transfers. The "Premium Membership" will cost between$5.95 and $9.95 and will offer unlimited file transfers. The company also unveiled key aspects of its rights accountingarchitecture and security technology. The new Napster, slated to launch this summer, will bedesigned as a promotional service with fidelity limitations of128 kbps and lower. Users will be asked to pay an additional feein order to burn CDs and to transfer their music to portabledevices. The service will be easy to use, and offer secure,complete and accurate file transfers, a new player with apersonal jukebox and enhanced search and community features. "I have so many cool things in development and I want to beable to bring them to the Napster community," said Shawn Fanning."I am also grateful for the outpouring of support from theNapster community, keep it coming!." About Napster Napster is the world's leading person-to-person file sharingcommunity. Napster provides music enthusiasts with an easy-to-use, high quality service for discovering new music andcommunicating their interests with other members of the Napstercommunity. Napster's software application enables users to locateand share music files through a user-friendly interface, andfeatures instant messaging, chat rooms, and Hot List UserBookmarks. Shawn Fanning, then an eighteen year-old freshman atBoston's Northeastern University, founded Napster in 1999. InOctober 2000, Bertelsmann AG and Napster announced the formationof a strategic alliance to further develop the Napster person-to-person file sharing service. In January 2001, edel Music and TVTRecords joined the alliance. This year, Napster won several WiredMagazine Readers Rave Awards, including Best Music Site, BestInnovative Start-up, and Best Guerilla Marketing. About BeCG Bertelsmann eCommerce Group (BeCG), formed in June as adivision of Bertelsmann AG, brings together Bertelsmann's entireportfolio of e-commerce companies and holdings such as bol.com,BarnesandNoble.com, CDNOW, and BMG Music Service in order todrive Bertelsmann's global e-content, community and commercebusiness. The group's objective is to build the leading globalcommunity and commerce network across all technologies andplatforms while providing an unmatched consumer experience aroundall forms of media and entertainment. Through the acquisition ofCDNOW and strategic alliances with AOL, TerraLycos and Napster,Bertelsmann has direct access to some 200 million customersworldwide. With 32 million unique visitors per month, Bertelsmannis the global Internet leader among all media companies. BeCG isa subsidiary of Bertelsmann AG, the world's most internationalmedia company with over 76,000 employees in more than 58countries. Bertelsmann's business units include publishing firms,music and film companies, multimedia services, online commercecompanies, daily newspapers, consumer magazines, radio andtelevision stations, book clubs, trade journals, and otherservice companies that provide information, education andentertainment to a worldwide audience.

Napster Business/Technology Media Contacts: KarenDeMarco/Julie Gladders, mPRm Public Relations, (323) 933-3399,kdemarco@mprm.com, jgladders@mprm.com

Napster Consumer Media Contacts: Jill Mango/Girlie Action,(212) 334-3200, mango@girlie.com

For BeCG: Frank Sarfeld Senior Vice President & CCO, BeCG646-758-0531 Email: Frank.Sarfeld@Bertelsmann.de

Alexander Adler Director Corp. Communications, BeCG+4940822262320 Email: alexendar.adler@becg.com

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