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TIME EUROPE Friday, January 5, 2001 The Digital DJ An Internet and music industry veteran has a plan for online song distribution By THOMAS K. GROSE London When British DJ, record producer and songwriter Paul Myers first heard about Napster, he thought: Great idea; shame there's no business model. So he set out to devise a business plan for a file-sharing site that would allow consumers to trade digital music, satisfy the royalty needs of the music industry and, not least of all, make a profit. He expects that site, wippit.com, to be up and running before the end of March. Napster, of course, is the online, free-music community that allows its 38 million users to search each others' hard drives and download any stored songs they like, compressed into the MP3 format that offers near-CD quality sound. While music buffs love Napster, the industry calls it outrageous piracy and has sued to shut it down. The lawsuit is still pending, but it may become superfluous. That's because Bertelsmann, the world's third-largest media group and a party to the suit, stunned the music world last November and joined forces with Napster. (See TIME, Oct. 2, 2000) The German media company gave Napster $50 million to devise a pay-as-you go model and is encouraging its industry rivals to do the same. But Myers, 33, is confident of beating Napster to market with Wippit — a file-sharing site that charges users and then distributes the revenues to artists, publishers, copyright holders and songwriters. Wippit uses software that logs each successful, completed download by tracking the ID tag that's embedded into each file. Those files that lack legitimate tags — or any songs from labels or artists who decline to participate — can't be shared through Wippit. Users will pay $50 a year for unlimited downloads, with one caveat: they can download only one song at a time. That income will be pooled, and Wippit will take a small distribution fee — Myers reckons around 17-20%. The rest of the cash will then be split proportionally among those deserving of royalties. "This is a model that works," he says, noting that it's not dissimilar from the way radio stations pay royalties. Wippit also expects to earn revenues from advertising. And Myers is keeping his goals small: he anticipates only 1 million users across Europe in Wippit's first year. Myers' first step is convincing the big music-publishing societies, like the American Society of Composers, Authors and Publishers, to sign on. And he's confident that they will. He says the major music companies should then quickly come aboard. Five months ago, Myers explained his business model to an executive at one large label, "and he actually laughed at me," Myers recalls. "But three months later he was calling me." The Bertelsmann-Napster partnership has completely changed the industry's notions about file-sharing for the better, he says. Myers, in addition to his music industry expertise, is also a Net vet. In 1998, he started Europe's first free Internet service provider, X-Stream Network, which he sold to LibertySurf last year for $75 million. That's why he's confident consumers will pay for MP3 music, despite Napster's free model. After X-Stream, there was a deluge of free ISPs, but they didn't put pay operators like AOL out of business. People will pay for quality and security, he insists. If he's right, and gets the music industry to back him, the sound of 2001 could be a wippit yipping with delight.
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