MIDDELHOFF URGES LABELS TO SPARE NAPSTER

Bertelsmann AG chief Thomas Middelhoff has urged record companies to "keep Napster alive," according to The Hollywood Reporter, at least until it becomes a legitimate business on July 1.

Bertelsmann invested $60 million in the controversial file-swapping site in October (hitsdailydouble.com, 10/31).

Middelhoff expressed his fears that should Napster be shut down, its 70 million users would be forced to go elsewhere, which would be a major loss for the record industry. Of course, if Napster fails to have a legitimate solution by July 1, Middelhoff told the Reporter, the service should be shut down.

"Napster is a community of music lovers," Middelhoff said. "Not only a community of music stealers or thieves, but people who are really committed to music."

Stressing that the music industry underestimated the Internet and was "caught unprepared" by advances in technology, such as file-swapping, Middelhoff said it wasn't fair to "criminalize the community of Internet lovers" as a result of the industry's slow action, according to the Reporter.

Middelhoff also maintained that "CD sales are up despite file sharing." The Bertelsmann chief also insisted that the new and legal Napster would not compete with record labels because the sound quality of files would be "better than radio, but not as good as CDs."