In a statement, the company said:
“Napster is not shut down, but under this decision it could be. We are very disappointed in this ruling by the three judge panel and will seek appellate review. The Court today ruled on the basis of what it recognised was an incomplete record before it. We look forward to getting more facts into the record. We will pursue every avenue in the courts and the Congress to keep Napster operating.“
Napster vowed to continue its efforts to settle the case with record companies. CEO Hank Barry said:
“We have been saying all along that we seek an industry-supported solution that makes payments to artists, songwriters and other rightsholders while preserving the Napster file sharing community experience. On October 31, we announced an alliance with Bertelsmann around a business model for a membership-based service that does just that.”
The company has been ordered to police its system to police its system to the extent that is possible. Its lawyers have pointed out that this gives some ambiguity in Napster’s favour as to what extent is possible.
One problem for Napster in trying to settle its case with record companies is in trying to find a workable revenue model that gives users access to all music while fairly reimbursing the various copyright holders. Finding such a model has been a major obstacle in Napster’s settlement negotiations to date.
There are incentives for record companies to settle with Napster, despite having the apparent upper hand in the legal proceedings.
First, Napster has an enormous user base, with 50 million names having been registered to date, making it a potentially valuable marketing platform.
Second, users have to log on to the Napster site to download files from other users. However, there are decentralised alternatives such as Gnutella and Freenet. These services allow users to download free software and then search the computers of any others on-line with the same software on their computers.
The dangers that Gnutella and Freenet present to copyright holders are that, not only do they offer access to all file types (not just MP3 files), there is also nobody to sue except the individuals exchanging files. There is no company owning the software. In the case of Freenet, the users and the files they exchange are said to be completely untraceable.
Both Gnutella and Freenet are in continuing development, although beta versions are already available and Gnutella has a significant userbase. They are presently less easy to use than Napster, but the expectation is that if Napster is shut down or too restricted, they will quickly take over.
See also: Court rules against Napster and upholds injunction, OUT-LAW News, 13/02/2001.