Analysts pick holes in Napster's settlement proposal

Analysts say Napster's attempt to settle its copyright infringement suit with the music industry is doomed to fail.

Commentators strongly doubt the recording industry will allow Napster, and its parent company Bertelsmann, to control the online distribution of their music.

Napster has pledged to pay more than £100m annually to Sony, Warner, BMG, EMI and Universal.

"Napster is basically trying to purchase the copyrights and resell them," said Susan Billheimer, an analyst with Zona Research.

"The record companies have an interest in distributing their music themselves over the internet."

Gartner analyst PJ McNealy added that the timing of Napster's deal - to coincide with the Grammy Awards ceremony - implies that the offer is little more than a public relations exercise.

He said the idea that Sony - which produces and distributes music, movies and books - would be prepared to "sit there and carve out the music piece to Napster, doesn't seem to make much sense."

Napster believes it can generate hundreds of millions of dollars to pay record companies via new monthly subscriptions.

It has tried to reach agreements with record companies since the lawsuit began, but to date has done so only with Bertelsmann's BMG Entertainment.

The other labels look set to continue to urge Napster to accept last week's appeals court ruling, in which judges ordered the MP3 filesharing service to block all copyrighted music.