Court rules in favor of recording industry
Associated Press
SAN FRANCISCO
Napster Inc.'s free Internet music-swapping experiment was imperiled Monday by a federal court's decision that it must halt what millions have come to enjoy: the sharing of copyrighted recordings.
Though Napster vowed to fight the ruling by the 9th U.S. Circuit Court of Appeals — and its backer Bertelsmann AG vowed continued support — the music sharing free-for-all via Napster may only last a few more weeks.
Ruling in favor of the music industry, the three-judge panel found that "Napster has knowledge, both actual and constructive, of direct infringement" of copyrights. The industry says nearly 90 percent of the music traded via Napster's servers is pirated.
"It's time for Napster to stand down and build their business the old-fashioned way. They must get permission first," said Hilary Rosen, president and CEO of the Recording Industry Association of America.
"This decision pretty much writes Napster's epitaph. Its days as an instrument of shoplifting are over," said Chuck Cooper, a lawyer on the RIAA team.
Napster CEO Hank Barry said the company would appeal to a larger panel of the 9th Circuit, and called on Napster users to lobby Congress.
He said the company, whose file-swapping clearinghouse can continue to operate until a lower court retools its injunction, would pursue every legal means to remain alive. No hearing date has been set.
Minutes after Monday's decision was announced, Napster users were trading more than 1.5 million files on just one of the company's more than 100 servers. Some were lamenting what they considered Napster's imminent demise.
Although Notre Dame and Saint Mary's banned use of Napster from campus computers last year, students still find the Court's ruling upsetting.
"The use of Napster and the Internet helps the growth of the music industry and CD sales," said freshman Erin Zachry. "If they choose to get rid of it, it might negatively affect record sales."
"I think it is going to be rough for eveyone who was getting free music," said junior Marc Nuno.
However, Nuno did find logic in the court's decision.
"I guess I agree. It seemed pretty illegal," he said.
The company says some 50 million people trade music in the popular MP3 format using Napster.
Major record labels hope Monday's ruling will force people to pay what Napster allowed them to get for free. One of them, Bertelsmann's BMG music unit, has promised Napster capital to develop a subscriber-based service that would pay artist royalties.
Bertelsmann invited competitors in October to join it, but none have announced any intention to do so and the German company's plans remained vague after Monday's decision.
"This is neither the beginning nor the end of Napster. Now it's really important to move to the future with a membership-based service, " said Andreas Schmidt, head of Bertelsmann's eCommerce group.
Schmidt said Bertelsmann was continuing to seek the support of other music companies in remaking Napster. He declined to comment on how those talks were going.
Technologies so far developed to try to introduce for-pay online music distribution with encrypted locks and keys have so far met with little success in face of the free music-swapping phenomenon.
There are plenty of alternatives. Napster knockoffs and other file-swapping programs, some based overseas, operate beyond the reach of U.S. courts.
Maureen Smithe contributed to this report.
All News Stories for Tuesday, February 13, 2001
