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Napster hopes link to CDNow will drive CD sales…

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Bertelsmann's investment in Napster may begin to pay off when the MP3 sharing software company ships its next upgrade.

The new version, unveiled yesterday, will contain built-in links to online music retailer CDNow, owned by the German media giant.

The move is the first part of a plan to not only provide Napster with a business model, but to stress its legitimacy and desire to work with the music industry.

Neither Napster nor CDNow said how much they expect to make out of the deal or how it is structured financially.

It seems primarily an advertising-style arrangement. Napster will promote CDNow on its Web site which will also link through to a dedicated search page. Presumably the idea is to allow all those folk who use Napster to sample new music to then easily buy the CDs.

An obvious extension to this is to present users with 'Click here to buy this disc from CDNow' whenever they download a track from that CD.

That's certainly what some users fear. As one put it yesterday, speaking to Reuters: "Napster is going against its original mission, which was to be a free service that cut through the bureaucracy of the recording industry."

Actually, it isn't - it's developing a business model that operates alongside and funds the free service, but it's not surprising many Napster fans might not see it that way.

Bertelsmann's fellow music industry giants are likely to remain sceptical too. However, the deal with CDNow will allow Napster to demonstrate - or not - that it's users are willing to pay for music and that providing a mechanism to share MP3s does indeed encourage users to try new bands and artists and to buy their CDs.

In that respect, this is make-or-break time for Napster's free service. If CDNow records a substantial (and demonstrable) volume of Napster-generated sales, Napster will be able to cut more deals with other e-tailers, which it desperately needs to secure for itself a revenue stream. Just as importantly, it will also be able to show the major labels that it's not a danger to them, as it has been arguing all along. ®

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