Bertelsmann deal marks new dawn for file sharing

Bertelsmann's music distribution arm BMG has agreed a deal that will see the German music publisher take up a warrant to buy Napster shares and provide a loan for future expansion. In return, Napster has agreed to implement a subscription fee for downloading Bertelsmann-owned music.

Napster users can expect to pay up to $5 a month to access the Bertelsmann catalogue.

The move has been welcomed by industry experts. Nick Jones, analyst at Jupiter MediaMatrix, said: "It's a coming of age for file sharing. This is what people want to do and the record companies have to follow that. The other companies should get involved, as users will want other labels. It's a classic internet opportunity for music companies."

BMG has also recommended the four remaining music giants named in the action against Napster - EMI, Sony, Time Warner and Universal - consider similar agreements to its own.

Simon Bazalgette, CEO at online music store Music Choice, said: "I don't support what Napster has been doing, but at the same time the music industry must be careful not to shoot the baby at birth. It is encouraging to see a player as big as Bertelsmann be so proactive."

However, Bazalgette was doubtful whether the 38 million Napster users will pay for the service.

He said: "Napster has proved that people want the service but it has not proved it is a service people will pay for. It needs to try these things out carefully so as not to kill off demand."

But Peter Beverly, vice chairman of digital rights service company Magex, disagreed: "People will use it and pay. Why do people pay for nightclubs rather than go to a pub?"

Peter Beverly, vice chairman of digital rights service company Magex, warned: "The new Napster needs to offer value and excitement and not fall into the trap of trying to force fit a legal Napster with money into the limitations of old Napster."