A Lot To Lose

Ahead of a court hearing to determine the terms of a modified injunction against the music file-sharing service, CBS News Computer Consultant Larry Magid has the following commentary:

Patel last July issued an injunction that would have shut Napster down had the company not won a last-minute temporary reprieve from the 9th Circuit Federal Court of Appeals. The court let Napster continue business as usual until it could hear and rule on the case.

Unfortunately for Napster, the appeals court ruled that Patel's decision, though "overbroad," was nevertheless basically on track. The three-member panel affirmed the district court's conclusion that "plaintiffs have demonstrated a likelihood of success on the merits of the contributory copyright claim." The panel sent the case back down to Patel so that she could issue a revised ruling that could come as early as Friday morning.

Ultimately, Napster and the record industry will duke it out in a full trial. Friday's hearing is to determine whether Patel will issue another temporary injunction that could curtail the Napster service until the case is resolved.

Napster is under legal attack from four of the five major music companies. It reached a settlement with BMG, but the other major players refuse to dance with the upstart file sharing service.

There is no question in my mind that Napster is aiding and abetting copyright violators. Let's be honest. Anyone who downloads a song without permission from the artist or label is, essentially, stealing the music. Napster attorney David Boies argued that such downloading is covered under the "fair use" clause of the copyright law, but the judges didn't buy it.

But Napster isn't just about getting music for free. It's also about giving people the ability to get the music they want, when they want it and in the form they want it in. The record industry's idea of music distribution involves getting people to drive to a store to pay nearly $20 for a dozen or so songs on a plastic disc that costs about 10 cents to reproduce. But Napster users can get the songs they want when they want them without having to buy an entire album for just one song.

At the risk of admitting that I'm a criminal, I have to tell you that I've used Napster and that I love it. I don't just love it because it's free. I love it because it's convenient. Sometimes I'm in the mood to hear a piece of music and it's great to be able to grab it off the Internet and listen to it right then and there. Personally, I'd be happy to pay a reasonable monthly fee for the privilege of legally being able to download music and I believe that millions of other people would also be willing to pay such a fee.

And, frankly, tht's the only way Napster can survive. In addition to being able to pay royalties, a subscription service would give Napster the revenue it needs to pay its employees, reward its investors and stay in business.

Right now, Napster has no revenue, so unless they can come with a way to "monetize" their service, they'll go the way of other dot-com financial failures, even if they weren't under any legal pressures.

I have little doubt that, sooner or later, the courts are going to rule against Napster unless the case is settled out of court. But the real losers in this battle aren't Napster's founders, employees and investors — they'll bounce back.

The losers will be the millions of fans who have found a better way to get their music, the artists who are getting greater exposure than ever before and the music industry that is shutting the door on a service that could become the best friend it ever had.

BY LARRY MAGID
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