January 12, 2001 3:35 PM PST

Dave Matthews Band releases single on Napster

The Dave Matthews Band has released a single on Napster in what is the first official promotion by a BMG Entertainment-backed act to tap the controversial file-swapping service.

The band's single "I Did It" is prominently displayed on Napster's Web site. The release was arranged by the band, but its record label, BMG Entertainment-owned RCA Records, is not expected oppose it. Other bands that have been outspoken supporters of Napster, including Offspring, have attempted similar promotions but were stopped by their record labels.

Napster is promoting the band on the front page of its Web site under "Featured Music," a section typically used to promote lesser-known bands.

The move marks the second significant development between BMG's parent company, Bertelsmann, and Napster since their partnership was announced in October. The first took place earlier this week, when Napster released an updated version of its download software that lets people connect directly to Bertelsmann-owned CDNow.

Analysts suggest that if cross promotions demonstrate a considerable uptick in sales, the lure may tip the scales toward convincing other Big Five labels --EMI Recorded Music, Sony Music Group, Universal Music Group and Warner Music Group--to sign partnerships with Napster. The analysts point to data from Jupiter Media Metrix, which shows that Napster members are 45 percent more likely to increase the amount they spend on music than online music fans that do not use Napster.

"Clearly, what Napster and Bertelsmann are looking to do is prove to the other record labels that Napster is a good thing," said Aram Sinnreich, an analyst with Jupiter Media Metrix. "They're looking to say, 'Look, in a four-week period, we drove sales of Dave Matthews Band CDs to xxx.'"

Other analysts however, point out that increasing CD sales is only a temporary solution for Bertelsmann and any other record labels considering partnerships with Napster. As the music landscape shifts from CDs toward MP3s, record companies will need to look for new ways to generate revenue from their copyrights.

"The digital music debate is not about the present. It's about five years from now and how record labels will stay in business if a consumer can get any song for free, store it online, and access it from their car, home stereo, portable MP3 player, etc.," Gomez music analyst Mark Pederson said in an e-mail interview. "Cross promotions have the potential to be a very good thing for the labels in the short term, but it does nothing to address their long-term concerns."

All five major labels have filed a lawsuit against Napster, alleging copyright infringement. A federal appeals court is reviewing the decision of a trial court judge to grant an injunction that would block trades of most copyrighted music using Napster's software. A ruling on the matter could come any day.

 

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