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Napster Inc. offered $1 billion to the recording industry Tuesday to settle a copyright infringement lawsuit that threatens to shut down the free Internet song-swapping service. Under the proposal, $150 million would be paid annually for the first five years to Sony, Warner, BMG, EMI and Universal, with $50 million allotted annually for independent labels. “We all ought to sit down and settle this case as fast as we can,” Napster chief executive Hank Barry said. “We’re saying this is something consumers really want. Let’s do something to keep it going.” However, an industry group instead urged Napster to accept a federal injunction ordering it to block copyrighted music from its service. “This path would be more productive than trying to engage in business negotiations through the media,” said Hilary Rosen, president of the Recording Industry Association of America. The offer was announced a week after a federal appeals court said the music industry almost certainly will win its lawsuit against the pioneering digital entertainment company. A three-judge panel of the 9th U.S. Circuit Court of Appeals ordered Napster to stop millions of users from swapping copyrighted music without charge and without restriction. Napster, whose lawyers have said such action would be virtually impossible, has vowed to appeal. Napster has argued it is not to blame for how subscribers use copyrighted material, citing a 1984 case in which the Supreme Court refused to hold VCR manufacturers and videotape retailers liable for people copying movies. But the appeals court said no such protection extends to Napster because the company knew users were swapping copyrighted songs. The panel also said there was evidence of “massive, unauthorized downloading and uploading of plaintiffs’ copyrighted works — as many as 10,000 files per second by defendant’s own admission.” Napster’s popularity exploded in 1999 after founder Shawn Fanning released software that made it easy for personal computer users to locate and trade songs stored as computer files in the MP3 format, which compresses digital recordings without sacrificing quality. The five largest record labels sued as soon as Napster took off, saying it could rob them of billions of dollars in profits. Napster did reach an agreement with Bertelsmann Inc., the parent company of the BMG music unit. The German media giant has promised much-needed capital if Napster switches to a subscription-based service that pays artists’ royalties. Bertelsmann executives were at the news conference Tuesday at which the Napster offer was revealed. Copyright 2001 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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