The deal breaks down to a five year plan with $150 million per year going to the five big record companies, and $50 million per year for the myriad of independent labels. These large sums would come from the subscription service the company has been working on, which would cost between $2.95 and $9.95 per month, according to Napster's CEO Hank Barry. Barry also pointed out that the current free service would disappear after a transition period.
Of course all this relies on whether people will actually pay for the service, which remains to be seen. Barry does state that if Napster kept a little over 3% of its current user base, it would make $119 million per year. Considering that they need $200 million a year just to make the payments in their proposed settlement deal, I'm not sure why he pulled a $119 million figure out of the air, but there ya go.
But this is probably all academic, since the record companies seem intent on stomping Napster into the ground in a draconian attempt to keep uncontested control of their beloved cash cow. Don't think that comment is fair? Consider this sobering statistic: According to the article, the proposed $200 million per year figure amounts to about one percent of what the record companies made last year.