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>Date: Mon, 12 Feb 2001 22:48:06 -0800 (PST)
>From: John Parres <johnparresATyahoo.com>
>Subject: pho: S: Victory or defeat?
>Victory or defeat?
>Did the record industry's court triumph insure a future full of profits -- or
>seal its doom? Experts weigh in.
>- - - - - - - - - - - -
>By Salon Technology & Business staff
>Feb. 12, 2001 | Although the Napster music-trading service is still breathing
>for now, most observers declare that the latest court decision spells imminent
>doom for the company. Now the question becomes, What next? Will Napster users
>flee to other file-trading networks? Or has the recording industry established
>its dominance over the new online world of music distribution once and for
>We asked our favorite suspects in the worlds of law, music and software for
>their opinions. Here's what they had to say.
>Eben Moglen, professor of law, Columbia Law School
>The record industry is about to discover that this was a terribly bad
>consequence of shutting down Napster -- whenever the injunction happens -- is
>that they will be on the cover of every major newsmagazine and 60 million
>people will again find out that you can share music online. They will also
>out that Napster's servers have been replaced by the OpenNap -- a program that
>allows any computer anywhere to be a Napster server and help people share
>In peer-to-peer file sharing, when the customer moves, the inventory moves
>him. The entire Napster-using public is going to figure out that they don't
>need Napster to share files. The consequence is that the music industry will
>then discover that the lawsuit was the stupidest part of five years of
>It will discover that this lawsuit fully popularized, publicized, promoted and
>spurred the development of the very alternative distribution system that
>trying to eliminate. This is how the industry will have turned out to have
>participated in bringing about its own highly satisfactory and complete
>Industry members will have created a situation that they can only control by
>going to war with their own customers. They've attempted to murder
>they've actually shot themselves in the head. Self-murder or suicide, they're
>dead either way -- it's an untenable business strategy in the long run to
>war with your own customers. But shutting down Napster will give them no
>sue but the listeners. This is one of those rare, but nonetheless important,
>situations in which victory in a lawsuit is defeat in the world.
>Whitney Broussard, attorney at Selverne, Mandelbaum & Mintz
>It's an interesting decision. Ultimately what it says is that Napster has to
>disable access to files that it has specific notice of. That makes sense; it's
>about right. It's pretty much what the Digital Millennium Copyright Act says
>when it talks about safe harbors for online service providers. That seems
>what Napster has been doing with all the Metallica users -- if it is presented
>with a list of allegedly infringing files, as far as I know it's been blocking
>What's more troubling are some of the statements about fair use. The decision
>makes rather broad statements about the consumer's lack of a right to make
>copies. It says that consumer use is commercial use because it's exploitative;
>that doesn't seem right to me. They also seem to imply that a user who is
>engaged in sampling -- downloading something to see if he wants to buy it and
>then deleting it thereafter -- isn't [engaging in] fair use, which I think a
>lot of scholars would disagree with. And they seem to be making the general
>assertion that consumers making copies of music for their own private
>noncommercial use is an infringement; they aren't talking about the fair-use
>aspects of that.
>What happens next? I think it depends on what the U.S. Court of Appeals says,
>if it wants to take it on. If the Court of Appeals decides to take it "en
>(i.e., instead of just three judges, they use the entire court of judges --
>it's not common but it is for very serious cases), then we go back to where we
>were a few days ago, where probably the injunction will get stayed on some
>level and it will be Round 3 and they'll be going down all these arguments
>If the Court of Appeals doesn't agree to take the case, I suppose they could
>appeal to the Supreme Court, which might or might not take it. But no matter
>what the court does it will be an unstable solution. It's difficult for courts
>to decide something like this; it probably needs to go to Congress.
>Gene Hoffman, CEO of eMusic
>The only place where the Court of Appeals disagreed with the U.S. District
>Court was the scope of the injunction itself. It denied all the defenses
>Napster put forth; the only thing it did say is instead of putting 100 percent
>of the burden on Napster, the plaintiffs need to share the burden by helping
>Napster identify the files.
>What the Appeals Court is saying is that it's clear that Napster can make sure
>that surf results don't return for obvious infringing files, and all that the
>plaintiffs have to do is point out the infringing files and Napster has to
>it happen. That's what we're planning to do. It's everything but an absolute
>slam-dunk. It changes the value of my company; it really invigorates and opens
>up an opportunity to serve all the customers that will be cut loose by
>Jim McCoy, founder of Mojo Nation, a peer-to-peer file-sharing service
>This was inevitable. Napster was lucky in that the injunction wasn't
>What's interesting is what the court said about how Napster relates to the
>First Amendment; it shot holes in the slashdot cypherpunk argument that
>The judges also changed how the DMCA will be applied. The District Court
>injunction held that Napster had to preemptively prevent illegal stuff from
>getting on the system. But now, with the present decision, it's a shared
>burden. Napster has to remove files if it knows that they're infringing, but
>the copyright holder has to notify Napster first. So Napster can't hide its
>head in the sand, but on the other hand, when someone connects up and uploads
>files, Napster doesn't have to make sure they're legal. So the court allowed
>for a safe harbor; it argued that it does apply but not quite as broadly as
>Napster wanted it. We think that's significant. It has confirmed the basic
>wisdom that if someone puts up a file, on a cache system, a Web page or
>Napster, the service doesn't have to nuke it until it knows about it.
>For us, it's a little less of a direct application. The Napster play is
>story. But at the very least, the decision clears the field and removes the
>cloud of suspicion. People in and around P2P had been waiting for the other
>shoe to drop. And if this decision had been overly broad, we would have all
>been in trouble. That was getting a little scary. But [the decision] didn't
>attack the technology. So I'm glad they said that there's nothing radical
>what the technology does; Napster just has to follow the same DMCA rules like
>Mark Cuban, founder of Broadcast.com
>Just another example of the recording industry doing its best to shoot itself
>in the head. It finally has a single destination Web site where 40 million
>digitally ready music fans go to celebrate their PERSONAL interests in music.
>Napster has become the ultimate music community. Rather than taking the easy
>road by offering those 40 million plus people the option of buying virus free,
>guaranteed quality and multi-format choices of hassle free downloaded music at
>realistic prices, they take probably what will go down in history as the
>stupidest business move every made, and shut the doors on the largest
>congregation of music buyers in the history of the world.
>What the music industry will be left with is their ongoing fantasy of
>drive music consumers to industry owned Web sites in enough volume to generate
>any material amounts of digitally delivered music revenue. The music industry
>has already spent and lost more money trying to create viable Web sites for
>digital commerce then they could ever possibly lose to downloaded music for
>personal use via Napster. With Napster gone, the cumulative total that the
>labels will spend trying to recreate their own personal crapsters will
>billion dollars easily and get absolutely no results.
>They paved paradise and put up a parking lot.
>Mike Godwin, lawyer and chief correspondent for IP WorldWide
>It's easy to get lost in the details here. What we're going to have at the
>trial court now is a negotiation over the scope of the injunction. Both sides
>are going to say what each thinks; we know that the original scope of the
>injunction that put all the burden on Napster was too broad. I don't think
>a slam-dunk that the record companies can just provide lists of their catalogs
>and say that anything on it is infringement. But maybe they can.
>What is true is they will go back to court and talk about the scope of the
>injunction, and that gives Napster another chance to rehabilitate its image in
>Judge Patel's court. Since that injunction was issued Napster has partnered
>with one of the plaintiffs. The kind of presumption that Patel brought to the
>case, and all her factual findings, were that Napster is just out to infringe.
>Now as we come back, Patel knows new things -- that Napster is partnering with
>a big-time copyright holder, BMG, and so the presumption that Patel brought to
>all the evidence is something she has to call into question now. I think
>not going to create an injunction that effectively shuts down Napster
>Patel just sort of assumed that Napster was illegitimate, but now that this
>negotiation is taking place, she has parties on both sides that qualify as
>legitimate businesses, and if Napster's legitimate business is squashed by
>injunction it can also claim undue hardship.
>Raymond Kurzweil, author of "The Age of Intelligent Machines"
>The recording industry has been behind the power curve on developing a viable
>business model in an era of ever more powerful file sharing and streaming. The
>model of charging almost $20 for a packaged album hasn't changed since I was a
>kid in the 1950s and earlier. Ultimately, these issues will affect all
>intellectual property, including software. I don't think shutting the Napster
>barn door will get the horses back in the barn.
>Jimmy Greer, a manager at Revolver, which represents the band Everclear
>I don't know how big of a ruling it's going to be; Napster's still going to be
>around, some way or another. If it's not Napster, you'll find someone else to
>do it. But hopefully, yeah, they're going to be able to do something about
>[Napster is] a big problem. It's basically stealing. But I don't think
>down Napster is going to solve it. Unless they come up with some kind of crazy
>encryption. But the people who can hack that kind of thing are always one step
>The whole Napster community could be used as a great promotional tool. The
>thing that hurts is when you put out a record that you've spent months and
>months on and then, two weeks before the release date, it's available on
>Napster. That really hurts sales. Especially for acts like Everclear,
>demographic is young people, 18-25. But it depends on the genre; you aren't
>going to see James Taylor's record sales affected because of Napster. But at
>the end of the day, people are still going to want to go to the store and buy
>the CD, to get the liner notes, art, etc.
>The Internet is never going to be a viable outlet for sales, or significantly
>Glenn Reynolds, lead singer of techno group Mobius Dick and law professor at
>the University of Tennessee
>Well, based on my oh-so-thorough reading of the opinion over the last 15
>minutes, it looks as if most of Napster's legal arguments have bitten the
>meaning that it'll have to win on the facts. (I am, to put it mildly,
>astonished that the court made such short work of the Audio Home Recording Act
>issue. To argue in this day and age that music on a hard drive isn't music is
>Napster's best hope, it seems to me, is to see a lot of stuff on its network
>that is clearly noninfringing. The court clearly left open the possibility
>the technology might evolve toward noninfringing uses and that notions of
>Napster's culpability shouldn't be based on a snapshot of what was going on at
>a very early stage. The more that Napster's content moves toward independent
>artists and major groups that grant permission for Napsterization of their
>tunes, the stronger its position at trial.
>Speaking personally, I've bought more CDs since getting music off the Web (not
>via Napster, which I don't use for security reasons), but they've mostly been
>from independent artists whom I never would have heard from previously. I
>think that this is the record companies' biggest fear: not that people will
>trade copies of Britney Spears, but that they'll bypass the record companies
>Ian Clarke, project coordinator for the Freenet project
>I'm not a lawyer, but it looks like the decision affirmed most of what the
>Recording Industry Association of America was claiming -- that it is against
>the law, that Napster should be shut down, that it is just a matter of time
>now. I think that the decision was certainly consistent with the law, but I
>don't agree with copyright law.
>I don't think the decision comes as a surprise to anyone; the fact that
>the network relies on Napster the company inevitably is a weakness in the
>system. It offers a clear way that you can attack a system like this, and it
>has been attacked.
>Freenet is specifically designed so that there is no one person or any one
>thing to be shut down. It doesn't rely on anyone or any person. Even I
>shut it down if I wanted to. The RIAA might come after me, but it wouldn't do
>any good; it would be ridiculous. Even if they put a gun to my head I couldn't
>shut Freenet down. It wouldn't make any more sense to come after me for
>than it would to go after the creators of the Internet.
>Gene Kan, CEO of Gonesilent.com, lead developer on Gnutella
>The decision seems to be paving the way to make it easier to make complaints
>similar to that of Dr. Dre and Metallica to be handled, to be acted upon. The
>whole basis is faster takedown, right?
>That's one approach. I'm not sure what the implementation of the takedown
>policy will be, whether it will be based on names of files or on users who are
>infringing or in the same way the Metallica and Dre complaints were handled.
>It's hard to measure the impact of that. If the tool is to be so blunt as to
>allow the recording industry to effectively remove all users from the Napster
>system, then I guess that shuts down Napster.
>And the more annoying Napster is to use, the more popular alternative systems
>will become. The Napster music swapping and everything like that are only one
>segment of P2P technologies. It won't affect this new technology broadly
>might affect the music-swapping segment.
>It seems to me that Napster really is the biggest friend of the recording
>industry in the sense that Napster has a ridiculous majority of the number of
>music-swapping users on its system, and they didn't leave in droves when
>proposed that Napster would be a subscription model; so it seems it's a gold
>mine that should be tapped. I guess almost 50 million users think that Napster
>is the next way to get music, and since that's the case it seems really
>shortsighted to try to put a stop to it.
>Terry McBride, manager of Barenaked Ladies and Sarah McLachlan
>I'm actually pleased. My issue with Napster wasn't with the actual software
>itself or the philosophy behind it. It was the fact that an IPO was being
>off the back of copyrighted master recordings that artists did not give
>permission to be used.
>If you want to use an artist's copyrighted work, you should give him or her
>some kind of fee for it. Napster could take the approach that MP3.com did, if
>it's so concerned about getting new music out there. But artists who don't
>their stuff up on Napster should be afforded that right.
>I'm pleased and happy and hopeful that now people can do this inside the
>which is how it should have been dealt with from Day 1.
>A lot of my artists really don't like Napster because it takes away their
>living. Napster's been out there saying CD sales are up again. Record sales
>have been up for the last 10 to 15 years, with this year being the slowest. In
>an industry where one out of a 100 pieces of music we release is actually
>successful, we need to maximize that one, because the other 99 are released on
>artistic, not commercial, merit.
>Kelly Truelove, CEO of Clip2, which analyzes the Gnutella and P2P services
>I think that we'll see an increase in Gnutella usage; we've seen increases in
>Gnutella usage when Napster was in the news in the past. I'm looking at
>comparing right now with a day ago, and we're seeing a 17 percent increase
>compared to yesterday. But the news just came out, and we haven't had much
>to see the impact yet. We did not see a substantial surge over the
>Gnutella has been going through a continuous growth phase for some time that
>continued right through the weekend. Every day for Gnutella is a record day.
>Over the last 30-day period, the average daily growth has been 7 percent.
>today, we average between 75,000 and 125,000 unique users per day. Napster was
>seeing something like 8.5 million users per day. Gnutella is quite a ways from
>But Gnutella does not scale very well, although some of the newer software out
>there does work better than the old ones. Things have improved relative to
>where they were last July and August, but some of the fundamental issues
>[If a million Napster users switch to Gnutella] users shouldn't expect to be
>able to access the content on all those 1 million drives, essentially --
>they'll only be able to share with some subset of the users who come over.
>That's kind of the way Gnutella scales -- sublinear scaling. The big
>alternative is OpenNap, a really huge service and one that's not discussed as
>much in the media as Gnutella. OpenNap scales more like Napster, by adding
>and more servers. And in general it's easier to use and a better experience
>Jack Valenti, president and CEO, Motion Picture Association of America
>The biggest beneficiary from today's decision will be the consumer because it
>will encourage content owners to put their creative works online knowing that
>the courts have confirmed what everybody knows: You cannot take for free what
>belongs to someone else. The fruits of this ruling will be seen in the film
>industry within six months as studios start to put movies online and offer
>consumers an exciting new high-quality and legal opportunity to choose what
>they want to watch.
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