U.K. & European Independent Record Industry Strikes Historic Deal With Napster.

Business Editors & Music/Internet Writers

REDWOOD CITY, Calif.--(BUSINESS WIRE)--June 26, 2001

The U.K.'s Association of Independent Music (AIM) and the Independent Music Companies Association (IMPALA) today signed a worldwide licensing agreement with Napster on behalf of the U.K. and European independent record sectors.

The agreement has at once authorized the use of hundreds of thousands of tracks belonging to hundreds of independent record labels across Europe and helped ensure the future of Napster's file sharing community when its membership-based service launches this summer.

The deal was confirmed at midday today by Napster's founder Shawn Fanning and interim CEO Hank Barry, and by Alison Wenham, chief executive of AIM, and Patrick Zelnik, vice president of IMPALA, for the U.K. and European independent record sectors. The agreement will be presented to AIM's membership by Alison, Hank and Shawn at AIM's AGM at 3:30 p.m. this afternoon. (A webcast and audio feed of the press conference (and AGM) will be available from late this afternoon, see below for details).

The deal covers tracks from artists including Moby (whose album, "Play," was the U.K.'s best selling album of 2000 and a massive seller internationally), Muse (their album, "Origin of Symmetry," went straight in at No. 3 in the U.K. albums chart this week), Ash, Paul Oakenfold, Tom Jones, Badly Drawn Boy, Underworld, Stereophonics (their album, "Just Enough Education to Perform," is currently No. 9 in the U.K. albums chart), Mogwai, The Avalanches, Moloko, Slipknot, Tricky, Miossec, Saint Germain and Belle & Sebastian.

In the U.K. the deal already involves more than 150 U.K. and European labels including Beggars Group, XL Recordings, V2 Music, Mushroom, Gut, Poptones, The Echo Label, Grand Central, Soma, Glasgow Underground, Cherry Red, Dome, Mowax and Dorado. Mute, Warp and Telstar are among many others who have also committed to be part of the negotiations.

AIM provided access to the deal to European-based independent labels via its relationship with IMPALA. Through IMPALA, key European labels such as Play It Again Sam (PIAS), Roadrunner, Epitaph, Naive and Wagram, as well as labels belonging to the national trade associations from France (UPFI), Germany (VUT) and Sweden (SOM) are to be part of the arrangement.

The genesis of the agreement followed a November meeting between a delegation from AIM and Napster Interim CEO Hank Barry and COO Milt Olin. Following general agreement on an initial proposal, IMPALA mandated AIM to negotiate with Napster on behalf of its independent label members throughout Europe.

The agreement draws on the obvious synergies between Napster's 60+ million enthusiasts and the grassroots fan-based nature of the independent music scene, and delivers a wealth of exciting content to the file sharing community.

This is Napster's first direct multi-label agreement. It does not cover third-party publishing in respect of which Napster will negotiate the relevant rights. The deal helps give Napster the critical mass it needs to launch its new service later this summer, and ensures a greater choice of music for consumers around the world.

Hank Barry said, "Later this summer, the new Napster will launch to the benefit of artists, labels, and consumers alike. Independent artists who record for the labels represented by AIM and IMPALA will be the first to benefit, thanks to the forward-looking leadership shown today."

Alison Wenham said, "This is nothing short of a global revolution for musicians and music lovers. It proves that the independent record labels of Europe mean business and helps secure Napster's future at the forefront of digital distribution of music. It means that anyone, anywhere in the world with access to a computer and a phone line can legitimately enjoy the most exciting music around."

Shawn Fanning said, "Independent artists and labels have always been the trendsetters in music and the music business. I'm grateful that they are now showing that leadership when it comes to using technology to make music more accessible."

Michel Lambot, co-chairman of PIAS and president of IMPALA said, "European policy makers will welcome a deal which aims at promoting greater cultural diversity and which goes some way to ensuring that small- and medium-sized companies have equal access to the new digital economy. Independents have an interest in encompassing the importance of new online music services and the expansion of the music market to the benefit of artists and alternative music."

(See additional quotes below)

About AIM

AIM is a non-profit making organization representing independent record companies in the U.K. in all genres. AIM's member labels are based across the U.K. and include Beggars Group, Warp, V2, Soma, Grand Central, XL Recordings, Telstar, Mushroom, Gut, The Echo Label, Grand Central, One Little Indian, Soma, Glasgow Underground, Wall Of Sound, Mute and Ministry of Sound. AIM's remit is to promote the use of its members' recorded music and maximize the sector's collective strength in relation to the music market as a whole, including the Internet.

Musicindie, an independent company part-owned by AIM, has been set up to provide all member record companies with economy of scale IT solutions, including a flexible e-commerce tool kit.

AIM operates a 'Friends of AIM' scheme for companies wishing to ally themselves with the U.K. independent record sector.

http://www.musicindie.org

About The U.K. Independent Record Industry

AIM members represent more than 25 percent of the U.K. market. Independent record companies are the lifeblood of the U.K. recording industry. This is borne out by the fact that the independent sector spawned four out of the six best selling albums of 2000 (including the number one which was Moby's "Play"). Further, 40 percent of new British artists who produced U.K. gold albums and 30 percent of those who produced U.K. platinum or multi-platinum albums during the 1990s were sourced by independent record companies.

The U.K. independents operate at the cutting edge, experimenting with untried trends and acts. They are able to develop new trends and artists effectively, with the result that the independent sector is responsible for the diversity and success of the record industry at large. This early adopter mentality is mirrored in all aspects of the independents' business and they are usually the first to break new markets and take advantage of technological developments.

The ability of the independents to move quickly and ahead of the majors was one of the main reasons AIM was established -- to maximize these opportunities and leverage their collective market share. By acting collectively, AIM can strike deals that otherwise only a major could negotiate.

About IMPALA

IMPALA is an international trade association that represents the interests of independent music companies and promotes the expansion and competitiveness of independent music in the interests of cultural diversity.

It represents the interests of the indigenous European industry and includes the top independents: Alondra (Spain), Beggars Group (U.K.), Cooking Vinyl (U.K.), Edel (Germany); Epitaph (The Netherlands), Gazelle (Sweden), Mute (U.K.), Naive (France), MNW (Sweden), PIAS Group (Belgium), Roadrunner (The Netherlands), Strictly Confidential (U.K.), Tommy Boy (USA), V2 Music Group (U.K.), Wagram (France) as well as national trade associations from France (UPFI), Germany (VUT), Sweden (SOM) and the U.K. (AIM).

http://www.impalasite.org

About Napster

Napster is the world's leading person-to-person file sharing community. Napster provides music enthusiasts with an easy-to-use, high quality service for discovering new music and communicating their interests with other members of the Napster community. Napster's software application enables users to locate and share music files through a user-friendly interface, and features instant messaging, chat rooms, and Hot List User Bookmarks. In October 2000, Bertelsmann AG and Napster announced the formation of a strategic alliance to further develop the Napster person-to-person file sharing service. In January 2001, edel Music and TVT Records joined the alliance. Last year, Napster won several Wired Magazine Readers Rave Awards, including Best Music Site, Best Innovative Start-up, and Best Guerilla Marketing. Napster is currently preparing to launch its new membership-based service this summer.

Accessing the press conference and AGM Webcast

The company has a webcast of the press conference, available to view from 7 p.m. this evening. Readers will also be able to see the AGM itself, from June 27 at 3 p.m. These are available on the AIM Web site, at the following address (readers will need Windows Media player to see them): http://195.40.194.46/intro/aim_agm_2001_webcast.asp

If you would like to broadcast these webcasts on your own Web site, using the AIM branded embedded player, (so that the webcast looks like it is on your site), contact [e-mail] or telephone [phone] and you will be sent the relevant information.

Audio only

To listen to the entire press conference available from 2 p.m. today for 48 hours (audio only):

Call-in [phone]

Access code 289 608

Additional Quotes

Paul Oakenfold (Perfecto Records) said, "Napster is a great way to discover new music and is an exciting model for the future. It puts the focus back on the music itself rather than the creative packaging or clever marketing; it is good that it has at long last become legitimate and the artists and their labels will get paid."

Ash (Mushroom Records) said, "We actively placed all of our new album on Napster as soon as it was completed and it definitely helped create awareness for our new songs and stimulated our fanbase. Anybody that thinks Napster is taking sales away from artists and record companies is severely out of touch with modern contemporary culture. It is one of the best promotional tools in the world and we are very excited about it becoming a legitimate system for distribution of music."

Martin Mills, Chair of Beggars Group, Vice Chair of AIM said, "Music lovers have demonstrated they love Napster. We want to get our artists' music to their existing and potential fans. We need to generate income from any use of our artists' music. This deal joins the dots. It's great news for music."

Guy Holmes, Chairman of Gut Records, Gut Records' acts include Tom Jones (whose album "Reload" was the U.K.'s 4th best selling album of 2000) said, "If we're smart we treat Napster like any other retailer. We should treat all digital distribution as an extension of our retail sales. We have to embrace it since it is a percentage of our future revenue."

Jeremy Pearce, CEO of V2 Music, whose acts include Stereophonics, Black Crowes, Underworld, Mercury Rev, Grandaddy and Nitin Sawhney said, "This is a trailblazing agreement for Napster and the independent sector across Europe. It caters to the proven appetite for a music file-swapping service while ensuring that labels and artists are fairly recompensed for their work. V2 supports any legitimate means of making its artists' repertoire available to the public."