*Bertelsmann Feeling Out Labels on Napster Business Model

Media giant Bertelsmann AG said yesterday that it has engaged in discussions with all major record labels to hammer out the details of a business model for its peer-to-peer MP3 file-sharing partner, Napster Inc.

Bertelsmann and Napster have created a business model and are reportedly shopping it around to Recording Industry Association of America labels.

Bertelsmann’s BMG, Sony, Seagram’s Universal Music Group, Warner Brothers and EMI have all sued Napster, alleging that the company facilitates mass copyright infringement.

Bertelsmann left the group last month by inking a deal with Napster and pledged to drop charges once a business model was developed to ensure that record labels are properly compensated for intellectual property ownership.

Meanwhile, rockers Elton John and Paul McCartney led a campaign warning Internet music fans to think twice before copying MP3 files. Their organization, British Music Rights, an organization for composers, songwriters and publishers, concentrates on the impact of song swapping on musicians.

The publicity campaign, dubbed “Respect the Value of Music,” is intended to remind users of systems such as Napster that the best things in life are not always free.

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