Napster to pull plug on copyrighted music

Michael Kahn

SAN FRANCISCO: Napster Inc., facing a corporate death sentence at the hands
of a federal judge, bought itself a brief reprieve on Friday by promising to
block users from accessing some one million music files covered by recording
industry copyrights.

Napster's last-ditch effort to conform with copyright law came as US District
Judge Marilyn Hall Patel held a hearing on how to formulate an injunction which
fans fear could put the online song swap service out of business. Patel ended
the hearing with a promise to draft an injunction order "that is workable
and makes sense" - but gave no indication when she might issue it. Legal
observers do not expect a lengthy wait.

Meanwhile, Napster's vow to filter out copyrighted music files starting this
weekend sparked cries of protest from users, who have made the service wildly
popular around the world by trading everything from Chinese pop songs to
Beethoven symphonies compressed into handy MP3 computer files.

"Oh my God. I'd better finish downloading," said one Napster
devotee scrambling to grab as much music as possible before the screening system
takes effect.

Napster's lead attorney, David Boies, said the new copyright protection
system should allow the company to stay in business - although many industry
analysts questioned whether Napster would still have the same appeal if it no
longer offers the world's top pop hits for free.

"I think Napster will still be the best music service out there, (but)
it will not be the same," Boies said.

Napster's offer came amid some two hours of argument from its lawyers and
representatives of the Recording Industry Association of America (RIAA), which
has sued the Internet upstart on charges of facilitating widespread music
piracy.

Industry analysts said that while Napster's move may have won it more time to
negotiate with the recording industry, it did not mark a sure path to survival
for the company.

"I'm sure that Napster usage will be very high this weekend and it will
be interesting to see the cat-and-mouse games as users try to get around the
blocking schemes," said International Data Corp.analyst, Malcolm Maclachlan.
"The main effect will be to grow usage on other peer-to-peer networks like
Aimster and Gnutella."

The court battle over Napster's future - involves everyone from the company's
youthful founder to major rock stars and one of the most famous lawyers in the
country. It is defining a case for copyrights in cyberspace and could affect the
way books, movies and all entertainment will be distributed online for years to
come.

Napster offers to police itself

At Friday's hearing, Napster's lawyers said the company was racing to
perfect new software to filter out copyrighted material and hoped to reach
agreement soon with the recording industry on how to identify such material.

"We have come considerably closer together on the issue of an
injunction," said Boies, who represented the Justice Department in its
antitrust suit against Microsoft.

Boies said Napster would begin policing itself by blocking access to some one
million files of copyrighted music over the weekend, with more to come.

Continued...

Most of activity on Napster involves the unauthorized trade of copyrighted
material. But Napster says it is unable to identify which files are copyrighted
and which are not, putting the onus on the RIAA to provide lists of material it
believes represent copyright infringement.

Lawyers for the recording industry, joined in court on Friday by lawyers
representing artists Metallica and Dr. Dre, said they had already submitted a
list of some 5,600 song titles - each of which could account for a vast number
of separate files on the Napster system - to be blocked.

While RIAA's legal team pointed out that serious questions remained about how
the new screening process would work, RIAA president Hilary Rosen had some rare
words of praise for the online company, saying it was the first time Napster had
sought to obey existing copyright laws.

The two sides have already established a mediation schedule for next week,
boosting hopes among Napster users that some sort of deal might still be
arranged. "We made a lot of progress in court today and it is important for
me to give some credit to Napster today," Rosen said.

Napster president and chief executive Hank Barry said the company firmly
believed the case should be settled. "We must come up with a solution that
works for consumers and pays artists. Let us never lose sight that the members
of the Napster community are the world's most passionate music fans and the
industry's best customers," Barry said.

Napster's service has attracted about 60 million users who swap songs for
free by trading MP3 files, a compression format that turns music on compact
discs into small digital files.

The major recording companies, represented by the RIAA, first sued Napster in
December 1999, claiming it was a haven for copyright piracy that could cost them
billions of dollars in lost sales. Patel issued an injunction on July, but a
federal appeals court two days later stayed her ruling pending review.

Major blow

The embattled service was dealt a blow on Feb. 12, when a three-judge panel
from the appeals court ruled that Napster could be held liable for copyright
infringement and that an injunction, which could essentially shut down Napster,
was not only warranted but required.

In its ruling, the panel ordered Patel to require the record labels to
identify which of their copyrights were infringed on Napster. Friday's hearing
was called to hammer out the details of how such an order would be implemented.

Napster has said it does not yet have the technology to sift through the MP3
files that are exchanged by users on its servers and it will be hard for them to
set up a system to do that. But on Friday its lawyers said work was progressing
fast and offered the copyright screening system as an important first step.

In an effort to draw up a workable long-term business plan, Napster has also
embarked on a project with major investor Bertelsmann AG to develop a new,
subscription version of its service, expected to be rolled out this summer.

The company has also offered the recording industry a five-year $1 billion
deal to enable it to swap their music on a new secure service, but this has
drawn poor reviews from its main opponents, which include Vivendi Universal's
Universal Music, Sony Music, Warner Music and EMI Group Plc.

(C) Reuters Limited 2001.