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"I don't think this is about money. I think this is about control."
—Napster CEO Hank Barry

WILL LAST RITES
BE READ TO NAPSTER?

A Trio Of Judges In San Francisco Grab Attention As File-Sharing Site Stares Down Shutdown

The headstone will read:
Here Lies Napster—A Great Idea Gone Bad.
Fondly remembered by founder Shawn Fanning, CEO Hank Barry, attorney David Boies, funding partners Hummer Winblad and those who dreamed of post-IPO stock options. What coulda been!
R.I.P. 1999-2000

On the eve of what could be a landmark court decision regarding the online music business, RIAA President/CEO Hilary Rosen said her organization, which represents the interests of the major label groups, is "hopeful" that the appeals court will stand by a lower court's decision that Napster is guilty of "wholesale infringing."

"We look forward to an opportunity to present our case in court on Monday (10/2)," Rosen said Friday in regards to Monday's scheduled hearing on Napster before the U.S. Court of Appeals for the 9th Circuit. "We're hopeful that the appeals court will uphold Judge [Marilyn Hall] Patel's ruling."

Judging from industry scuttlebutt and the courts' current intolerant stand regarding copyright theft, Napster's existence as we know it will most likely change radically. And, if it doesn't happen today, it will when a final verdict in this much-watched legal battle is reached, observers predict.

Today's oral arguments, which will kick off at 11 a.m. PT in San Francisco, are unlikely to result in an immediate ruling. But watchers caution that Patel was also thought unlikely to rule quickly with her initial decision against Napster in July.

After two months of legal skirmishing with the record industry, the controversial online file-sharer's attorneys now return to federal court, arguing before a panel of three appellate judges.

The trio will be deciding whether to uphold a lower court's order to temporarily forbid Napster from doing what it does—allegedly assisting in the free trading of MP3 music files without the copyright holder's permission.

The troika today could simply send the decision back to the lower court for another round of hearings. But many of the legally minded believe that the three will take this opportunity to make a definitive ruling on some of the issues that cloud the future of online music distribution.

"What we ultimately wish to come out of this process is an increased cooperation between innovation and industry so legitimate business models can make more music available online," said Rosen in a statement.

While both sides have been talking for months about a possible pre-trial settlement, sources familiar with these negotiations said meetings between litigants have ceased and basically went nowhere as a common ground could not be met.

Napster CEO Hank Barry said his company has offered several different financial and business proposals to the labels (hitsdailydouble.com, 9/27), adding Napster has been working on new business models that involve a subscription service, in which users would pay a small monthly fee for access to the service.

Last week, Barry, speaking at the University of Michigan, strongly encouraged the idea of settling the suit. "We want to be able to pay the record companies as some kind of settlement," he said. "The artists should be compensated as well."

Barry reportedly said if Napster were to become a pay site, he would expect to lose up to 90% of its 30 million users immediately. Even if Napster posted those losses, Barry said he would be able to pay $500-$600 million a year to the record companies if they agreed.

They didn't.

"It's been basically me negotiating against me," Barry said. "I don't think this is about money. I think this is about control."

The trial today follows Judge Patel's order two months ago, which called for Napster to block all major-label songs from being traded through the service or shut its doors.

The appellate judges have several options. They can uphold Patel's decision, in which case Napster would for all intents and purposes be shut down. They could overturn Patel's order, saying that there is no need for a preliminary injunction to stop Napster while the record industry's case goes to a full trial. Or they could send the injunction back to Patel for more hearings.

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