May 15, 1998 12:00 AM

In a stunning effort to shake loose from its legal woes, Napster Inc. and its strategic partner, Bertelsmann AG, have offered $1 billion to the major record groups and independents to settle a copyright infringement suit that could shut down the popular file-swapping service. The Napster-Bertelsmann proposal, announced Tuesday at a San Francisco press conference, was attended by Napster CEO Hank Barry and its founder Shawn Fanning, among others. Under the proposed offer, Napster would pay the five major label groups — Sony Music, BMG Entertainment, EMI, Universal Music Group and Warner Music Group — $150 million a year for the first five years for nonexclusive licenses. Additionally, a pool of $50 million a year would be set aside for independent labels and artists. The decision by Napster to go public with the $1 billion offer rather than approach the labels individually was denounced by Hilary Rosen, president and CEO of the Recording Industry of America. (The Napster press conference came in the wake of the 9th U.S. Circuit Court of Appeal’s ruling last week that Napster must cease trading copyrighted files belonging to the major label groups and music publishers.) “Our member company plaintiffs have always said that they stand ready and willing to meet individually with you to discuss future licenses,” Rosen said in a statement. “This path would be more productive than trying to engage in business negotiations through the media.”

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