RealTime IT News

Music Plays on for Napster

No progress was made in 9th Circuit Court of Appeals in San Francisco Monday in Napster Inc.'s legal battle with the U.S. recording industry.

The three-judge panel of the made no immediate decision on a request by the Recording Industry Association of America (RIAA) for a ban on Napster, all of which means the popular peer-to-peer music sharing service can stay in business for at least the next few weeks.

However, insiders say judges will ponder the issue and rule on whether or not to halt Napster at a later date: There is no deadline on a decision. A boon to more than 30 million music lovers of all ages and demographics, Napster was found guilty of music copyright infringement by U.S. District Court Judge Marilyn Hall Patel in July. However, the 9th Circuit stayed that decision almost immediately Patel ruled, saying it needed more time to consider.

Still, many industry insiders view Napster's situation as precarious -- the firm itself said an injunction, albeit, a temporary one, could spell doom for the company's business. Others feel the battle will set a necessary copyright precedent for peer-to-peer Internet businesses in the future.

In the suit, Napster faces such giants as Seagram Co. Ltd.'s Universal Music, Bertelsmann AG's BMG, Sony Corp.'s Sony Music, Time Warner Inc.'s Warner Music Group and EMI Group Plc.

Hilary Rosen, president and CEO of the Recording Industry Association of America (RIAA), issued a statement upon the conclusion of Monday's proceedings.

"Nobody expected a ruling from the bench today but we were pleased with the court's understanding of the issues," Rosen said. "This case has never been about technology. Rather, it is about Napster's abuse of peer-to-peer technology for its own commercial benefit. It is our hope that the Court sends the message that this activity will not be tolerated, so that legitimate businesses who pay creators can enter the Internet market and compete fairly."

Napster CEO Hank Barry reiterated his disappointment that the recording industry wants to settle in court after Monday's proceedings.

"Over a period of many months, Napster has made serious proposals to each of the major record companies and their publishing affiliates that involve payments of substantial percentages of expected company revenues to compensate artists and rightsholders -- proposals whose most conservative estimates would result in payments of over $500 million to the industry in just the first year alone," Barry said. "Every one of these proposals has been rejected, and the record companies have made no counterproposals.

Barry said his company had tried to extend a gesture of good faith to the record companies, suggesting a compromise under which it would charge users a monthly $4.95 membership fee, something other file-sharing firms have tried, and a business model Napster perhaps could have perhaps employed before getting into hot water with the industry it claims has put a "chokehold" on music distribution.

Napster's style has been to portray its case as a kind of David-versus-Goliath scheme whereby the smaller company is persecuted by a giant, greedy one. The recording industry has made no bones about calling Napster a thief engaging in mass music piracy.

Ironically, the more the industry portrays Napster as the bad guy, the more music fans are rushing online to download as many MP3 files as they can get their mitts on.