Beyond business issues, the service must work through a raft of technical and legal issues. Many lawyers say the deal will do little to stave off court action that could potentially shut down Napster in the short term, even if it might improve its legal position over the course of a longer trial. Aside from that case, Bertelsmann and Napster will have to figure out how to account for royalties and pay individual artists and music publishers. The unregulated Napster, which does not track downloads and pays no royalties, has not had to deal with this. An authorized version will have to overcome severe logistical difficulties and ongoing expenses to make it work.
Details are slim on how the company expects to track songs and deliver royalties.
Napster attorney David Boies alluded Tuesday to a statistical sampling system, which wouldn't track individual songs. Publishers have rights to more than 7 cents for every copy of a song made, which mounts into the millions of dollars quickly given an audience of Napster's size. Nor have royalty rights for artists covering this type of situation been worked out in previous contracts. That's one issue that has slowed music companies from quickly offering digital music distribution and could be a stumbling block in creating an unambiguously legal Napster, some say. Despite these hurdles, many in the digital music world welcome the deal as a sign that the major labels are warming further to Net music.