Napster Takes A Nap

Napster Inc.'s Web site and music sharing service were unavailable for a few hours early Wednesday as a technical glitch interfered with music downloads.

The site was back up by late morning. The problem was not related to the recording industry's pending copyright infringement case against Napster, the company said.

Attorneys for Napster and the Recording Industry Association of America presented arguments to a three-judge panel of the 9th U.S. Circuit Court of Appeals on Monday. The music industry has sued to shut down Napster, claiming it contributes to copyright infringement by allowing millions of people to download music directly from each others' computers.

The judges are reviewing a lower court's injunction against Napster that would shut the service down pending a ruling. The injunction was later stayed by the appellate court.

Attorneys for Napster and the Recording Industry Association of America presented arguments to a three-judge panel of the 9th U.S. Circuit Court of Appeals on Monday.

The music industry has sued to shut down Napster, claiming it contributes to copyright infringement by allowing millions of people to download music directly from each others' computers.

The judges are reviewing a lower court's injunction against Napster that would shut the service down pending a ruling. The injunction was later stayed by the appellate court.

During a hearing earlier this week, the panel of three 9th U.S. Circuit Court of Appeals judges peppered recording industry lawyers with queries, trying find out how exactly Napster's service should or could be monitored to weed out the trafficking of copyrighted music among what Napster claims are 32 million users.

Judge Robert Beezer told Russell Frackman, a lawyer representing the Recording Industry Association of America, that asking Napster to keep tabs on music traded by its users might be too much to handle.

"How are they supposed to have knowledge of what comes off of some kid's computer in Hackensack, N.J. to a user in Guam?" Beezer asked.

Frackman said the answer lies in Napster's ability to take a list of copyrighted song titles and redesign its service not to transmit those files.

The hearing was part of the continuing legal battle between Napster and the RIAA, which alleges that Napster contributes to copyright infringement by allowing millions of users to search for music with its MusicShare directory and then download directly from each others computers. The recording industry considers this case pivotal in its battle against online piracy.

Attorneys for each side had 20 minutes to make their case Monday. The judges adjourned without reaching a decision, which could come at any time.

Through its questions, the appeals panel suggested that U.S. District Court Judge Marilyn Hall Patel's injunction shutting down Napster prohibited legal uses of the music-sharing software, such as the trading of non-copyrighted music.

David Boieswho successfully prosecuted the government's antitrust case against Microsoft Corp., said reinstating Patel's injunction could put Napster out of business, reports CBS News Correspondent David Dow.

Boies argued that Napster is not involved in wholesale copyright infringement, as the recording industry contends.

Patel's injunction against Napster in July said the small Redwood City, Calif.-based company was encouraging "wholesale infringing" against music industry copyrights.

The ruling upset fans like Frank Bruno in Los Angeles, reports CBS News Correspondent John Blackstone.

"As a music lover, I was completely devastated," Bruno said.

But hours before Napster's computer servers were to power down, the appeals court stayed the injunction, keeping the company's service alive.

Napster also claimed the promotion of artists who permit their songs to be shared would be hurt by reinstating the injunction, adding that the 1984 Supreme Court decision allowing Sony to continue manufacturing VCRs that can duplicate copyrighted materials also covers Napster's service.

But Frackman argued that Napster was specifically created to aid users engaging in copyright infringement. Frackman said the music industry is not "trying to stop the Internet," but wants to stop Napster from allowing its users to swap pirated music.

Napster, started in a Northeastern University dorm room last year, pioneered the concept known as peer-to-peer computing, in which people share files from their own computers rather than a central server. In Napster's case, users can download music from each other that is stored in the MP3 format.

Napster chief executive Hank Barry said the company has been in discussion with individual record labels about a possible settlement, but no deals have been reached.

One solution might be a monthly fee to use Napster's service, though Barry said that is just one of several proposals he has put on the bargaining table.

"Whether $4.95 a month or $1.99, the whole structure of this thing is trying to compensate artists," Barry said. "We're willing to pay very substantial amount to the artists. With a very conservative estimate, the first-year payments to the artists would be in the neighborhood of a half a billion dollars."

Another company, MP3.com, allows users to listen to, but not download, copyrighted songs stored on its own computers. It has settled lawsuits brought by four record labels but in September lost a copyright-infringement case brought by Universal Music Group. That case is likely to reach the Supreme Court.

Even if the recording industry succeeds in shutting down Napster, it still faces the enormous challenge of trying to halt the online swapping of pirated digital music.

Unlike Napster, popular programs such like Gnutella and Freenet allow users to swap music without going through a central server. Experts say shutting down such services would be net to impossible because of the Internet's very nature.

Hilary Rosen, president and CEO of the RIAA, has said she hopes for "increased cooperation between innovation and industry" to get more music available online. "It is really awfully hard in the marketplace today to compete with free," Rosen said Monday.

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