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Napster Inc. has agreed to fork over $26 million to settle its legal battle with songwriters and music publishers. In addition to the damage award for copyright infringement, the Redwood City, Calif.-based music-swapping service also agreed to pay $10 million against future licensing royalties. Music owners will receive one-third of the royalty payments and record labels two-thirds of the payments. The deal ends a portion of Napster’s legal woes. It has still to work out a deal with its primary foes, the recording labels. The stakes are much higher in that battle, as the labels are seeking significant damages. The Recording Industry Association of America had no comment on Napster’s deal with the music publishers nor would it comment about its negotiations with Napster. The music publishers have been in negotiations with Napster on and off for several months, said Carey Ramos, a partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison, who represents the groups. “What really made a big difference was their willingness to pay a substantial amount in the settlement of the past [damages] and a substantial advance in licensing in the future,” Ramos said. Napster General Counsel Jonathan Schwartz said there was “increasing pressure from Congress on rights holders to make progress and make their works available through the Internet.” Members of Congress, including Senators Patrick Leahy, D-Vt., chairman of the Judiciary Committee, and Orrin Hatch, R-Utah, played a role in the high-profile battle. “They were active in trying to make sure the conversation continued so we wouldn’t get stuck in a rut,” Ramos said. Napster has been left with little recourse but to finalize a deal with its adversaries. In July, Judge Marilyn Hall Patel of the U.S. District Court for the Northern District of California ordered the company to remain offline until it could comply with a preliminary injunction she issued in March. And last week the 9th U.S. Circuit Court of Appeals ordered lawyers on both sides to stop filing papers with the court. Napster had sought relief from several rulings issued by Patel. The battle began in December 1999 when 18 record labels sued the music swapping service for copyright infringement. Songwriters subsequently filed a separate suit, which has progressed in tandem with the recording industry’s case. Napster plans to introduce a membership-based file sharing service later this year with recordings from hundreds of independent record labels. The company also will separately offer music from three major record labels. Schwartz said the company has not finalized its pricing for the service.

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