Just hours before a federal court order was to shut down the popular music-exchnage service, Napster, an appeals court stepped in. Late Friday, it stayed execution of Wednesday’s order, allowing Napsters to continue operating while the courts consider Napster’s appeal. The order issued on Wednesday by U.S. District Judge Marilyn Hall Patel would have forced Napster to shut down late Friday.
“The preliminary injunction issued by the district court in this matter is stayed pending further order of this court,” the appellate judges said, noting that Napster’s lawyers had raised “substantial questions” about the injunction they said would put the service out of business.
Lead Napster attorney David Boies told Reuters the stay would allow the company to resubmit its argument that its users are legally sharing their own property and that Napster itself should not be held responsible.
“The individual user has an absolute right to share music,” Boies said on CNNfn. “The problem is the RIAA seems determined to kill this new medium. If that’s so, we’re not going to go quietly into that night. We’re going to fight.”
The decision was a stinging defeat for the Recording Industry Association of America (RIAA), which in December sued Napster for facilitating wholesale music piracy.
“It is frustrating, of course, that the tens of millions of daily infringements occurring on Napster will be able to continue, at least temporarily,” RIAA President and CEO Hilary Rosen said in a statement. “We look forward to the day when the infringements finally cease.”
Just after the decision, Napster released a statement applauding the decision, saying the technology behind the popular product can benefit artists, consumers and the industry.
“New technologies can be a win-win situation if we work together on building new models — and we at Napster are eager to do so,” the company said.
Napster founder Shawn Fanning said the company was pleased that its 20 million users would not be turned away. Meanwhile, he said the company will continue to encourage users to participate in its “buycott.” The company is spearing a drive to get Napster users to purchase CDs of artists who are supporting the technology.
The latest news comes as other file-sharing services are facing similar legal battles. Scour Inc., the Michael Ovitz-backed multimedia search site last week, was hit with a lawsuit from the Motion Picture Association of America and the National Music Publishers Association.
In a 25-page brief filed in U.S. District Court, these organizations allege Scour is Public Enemy No. 2 behind Napster for providing Scour Exchange, which enables consumers to snap
up movies and music.
Meanwhile, several companies in the field have stepped up work on business
models that monetize, or give content owners control, over digital content.
In fact, Napster co-founder Bill Bales and early Napster investor Adrian
Scott last week launched AppleSoup,
which will allow content-owners to distribute “anything digital” online.
Anything, that is, except music. Though Bales wouldn’t divulge
exactly what AppleSoup’s machinations would be just yet, he told
internetnews.com the
business model revolved around “protecting copyrights and partnering
with content-owners and content-creators.”
Another new service is trying to mix MP3 file exchange with paid promotional announcements.
Digital Payloads Inc. launched two weeks ago with the brazen announcement that it was
dropping a “bombshell on Internet music wars,” the start-up is a digital
media promotions company that embeds record label or advertiser promotionsan
d links, called “Payloads,” into licensed music files.
This technology provides artists and record labels with revenue and other
promotional benefits. Jon Brewer, co-founder of the new firm, said the
business model seemed like a logical move in light of the file-swapping
trauma.
“There exists a great chasm between free music and music that is paid for,”
Brewer told internetnews.com recently. “Digital Payloads tries to bridge the
gap. It seemed like a simple solution to go to.”
With this service, listeners download an MP3 file for free and view
promotions from firms signed on with Digital Payloads. Listeners are also
linked to artist or label/advertiser Web sites. Payloads work with MP3
players, including WinAmp, MusicMatch, Sonique and Windows Media Player.
The firm also offers the technical assembly service of creating Payloads, as
well as the distribution service that delivers Payloads to users.
EverAd Inc. is another firm that looks
to monetize digital content. It, too, has a solution to digital music
distribution; PlayJ.com
Brian Gonick, vice president of corporate and business development at
EverAd, said he was firm in his resolve that advertising on digital content
is one way to allay labels’ and artists’ fears of piracy.
Like Digital Payloads, PlayJ.com displays ads when users go to download
music, but, Gonick pointed out a difference.
“I like what Digital Payloads is doing, but we refresh our ads,” Gonick explained to internetnews.com. “It gets irritating seeing the same ads over
and over again.”
PlayJ.com features a “JSpace” window in which ads are shown and refreshed
regularly by the company, along with 65,000 songs to choose from. Like
Digital Payloads, the service is free, and labels and artists are paid
through the advertising. Gonick saidEverAd also compiles regional data to
see if certain concerts or other performances are playing; the company would
offer advance notice and promotions about upcoming album releases or events.
Sounds like a wonderful plan, doesn’t it? Not every one is buying it,
however.
Cyber Dialogue Vice President
Peter Clemente isn’t so sure that advertising is the best solution.
“Who wants to listen to, or watch an ad before they play music?” Clemente said in response to advertising-based
business models. “If I want to listen to music I want to put it on right
away — not wait for a 30 second or one-minute ad to flash across the
screen.”
Clemente said the companies plans to monetize digital content is a step in
the direction of keeping in the good graces of the RIAA and the Big 5, but
that ultimately a better business model should be employed.
“Consumers might buy a single and deal with the ad, but not an entire album
with ads,” Clemente said. “It’s Internet commoditization — people who are
tired of being bombarded by ads want to see less info — not more ads. So,
we should seeing some new business models developed that are more consumer
oriented.”
Noting that music sales hiked up 8 percent in 1999, Clemente insisted that
people will pay for music online, if only a great library of content were
created.
Michael Downs, vice president of business development at digital commerce
service provider Magex Inc., said the
advertising model was intriguing. He also said he understood why Clemente
was bearish on the advertising revenue model for exchanging digital content.
“From the consumer’s point of view, you’d have to wonder how it would work,”
Downs told InternetNews.com. “But it makes sense from the
business’ standpoint.”
“I don’t know that their business models fly in the face of other
advertising-based models,” Downs said. “We would have to see if it achieves
scale.”
Magex has been concerned with digit
al rights management sinceits launch in
1998 by National Westminster Bank. The unit was spun off three months ago
and has since raised $80 million in financing led by Goldman Sachs.
Magex offers free music downloads as well. It allows content providers to
wrap digital content in an encrypted envelope called the DigiBox container,
letting them transmit and protect their intellectual property and content.
Content is accessed using Player software supplied by Magex and by third
party vendors. When users open the envelope, they
can access and use the content according to a number of pre-defined rules,
set by the content provider.
For example, users may be able to play one track from an album free of
charge, pay $4 to hold the music digitally on their PC, and $10 to download
the music to another machine or player.
