IMG Entertainment has purchased Songspy-dot-com, an online peer-to-peer music website that allows consumers to download music from the Internet. Unlike Napster, Songspy.com is the first of its kind that plans to pay royalties to artists through the record companies while keeping the service free for users.
"It's a win-win situation," said CEO Sherman Shultz. "We are very different from Napster in two distinct ways: first we serve as a consumer tool for the eventual purchase of music and secondly, because we will provide royalties back to the music companies. Isn't that what all the fuss is about anyway?
"We believe consumers should be able to listen to their favorite artists before deciding what to buy," he continued. "At the same time, we recognize that the music industry is entitled to be paid fairly for creating the music in the first place."
In order to pay royalties to the music companies, Songspy.com is developing software that will enable them to track which songs are downloaded. The tracking system is expected to be in place within three to four months. Songspy.com will then use this technology to compensate the record labels, whereby they can then pay the musical artists, based on users downloading frequency.
Songspy.com will also offer consumers "Karma Points," earned by downloading music. Karma Points can be used for discounts on CDs, t-shirts, and other merchandise, as well as promotional items like concert tickets. The revenues that are generated from the sale of merchandise through Songspy.com will in turn be used to pay royalties.