Spawn of Napster

SAN FRANCISCO (05/01/2000) - Howard King has a lot on his plate these days. The attorney represents heavy-metal band Metallica, which three weeks ago led the latest charge against Napster Inc., the maker of a popular music-swapping software program. The group sued Napster for contributory copyright infringement and racketeering. Now, more of King's high-profile clients are lining up: Last week, rapper Dr. Dre filed his own suit, and King says at least 10 other artists or managers and a publishing firm have approached him about taking legal action against the Internet company.

Yet King doesn't expect to be tied up with Napster for long. "If Metallica wins, everyone else's suit will be easier," says King, a partner at King, Purtich, Holmes, Paterno & Berliner in Los Angeles. "But if Metallica wins, Napster is out of business, so there's no one else to sue."

That's a naive assumption. Regardless of the outcome of the Napster suits, the Internet is fundamentally transforming the music business. The Net's capacity for the free exchange of all kinds of data has whetted a voracious appetite for sharing music. And a whole generation of startups is finding ways to satisfy it.

Napster allows surfers to share their personal collection of MP3s -- a popular file format for digital music -- via direct download among their hard drives.

Napster users are able to locate and make unlimited copies of virtually any song at any time from what is essentially a free, global music library. The company maintains that it is not liable for copyright infringement because its own servers don't host the music. But a bevy of musical artists and the five major recording labels, which sued Napster in December, are scrambling to curb what they view as large-scale piracy and a serious threat to album sales.

It's too early to say exactly how much of a dent downloadable music -- legal or not -- has made in traditional revenue streams. But getting music for free is clearly a hit with college students, whose avid file-trading has forced dozens of schools across the country to limit or even ban Napster in order to free up bandwidth. Even that won't solve the copyright issue, though.

"(If I couldn't use Napster) I'd find another way of downloading free MP3s," says Raymond Yang, a Napster user at the University of Southern California, one of three universities also named as defendants in Metallica's lawsuit, and the only one that did not subsequently ban the software. (Metallica dropped Yale and Indiana University from the suit following their decisions to block data traffic between Napster and the colleges' servers until the legal issues are resolved.)Among the sites offering alternatives, Beverly Hills, California-based, backed by former Hollywood superagent Michael Ovitz and grocery-chain magnate Ron Burkle, is probably the best known. Last month it launched a Napster-like service called Scour Exchange that lets users share all kinds of multimedia files. (Napster users can now do the same, thanks to an anonymously authored program called Wrapster, which makes any file look like an MP3.)When someone downloads the Scour Exchange software, she automatically joins a swapping community whose pool of available content grows with each new member, similar to the way Napster works. Travis Kalanick, Scour's vice president of strategy, says that unlike Napster, Scour has sealed licensing and syndication deals with content providers to distribute legitimate content.

Regardless, surfers can still share their own files, which may or may not be legitimate. Scour, like most other file-sharing sites, has a procedure for dealing with copyright complaints: If a copyright holder notifies Scour in writing of an infringing link, the company says it will take it out of its database. The company also has established its own "three strikes" policy: If a copyright holder reports three violations by a particular user, Scour says it will kick the person off the system. Despite its vigilant posturing, though, Scour doesn't need to expend a whole lot of energy enforcing its rules since the burden of proof rests with artists and labels.

Kalanick defends the policy. "If they are not able to (monitor use), then how can a company like Napster or Scour do this?" he asks. "It isn't fair to say this technology can't exist just because some people aren't doing the right thing with it."

"No one goes into this business to tick off the recording industry unnecessarily," says attorney Andrew Bridges, who successfully defended Diamond Multimedia, maker of the Rio portable MP3 player, in a landmark case brought by the Recording Industry Association of America (RIAA) in 1998. "On the other hand, the recording industry doesn't play fair, and no one can wait for the RIAA's consent or approval in order to develop a business plan."

Gigabeat is one startup that is pressing ahead with its plans. The company has developed a music-locating service based in HTML, so people don't have to download special software. A spokeswoman stresses Gigabeat will be launching a "completely brand-new site" in June. Until then, however, the existing site combines elements of Napster -- like a sophisticated search engine and easy downloads -- with related-artist recommendations similar to music directory The company has attracted high-profile attention: Its coterie of investors includes top-tier VC (venture capital) firm Kleiner Perkins Caufield & Byers; Andy Bechtolsheim, cofounder of Sun Microsystems and a vice president at Cisco Systems; and Sabeer Bhatia, founder and former chief executive officer of Hotmail.

With so much enthusiasm for the technology from investors, developers and Web surfers alike, many observers say there's no turning back. "Artists and labels are really going to have to find other revenue models," warns Thomas Hale, CEO of WiredPlanet, a San Francisco-based Webcaster.

Napster could theoretically be forced to shut down its servers, which house the directories pointing to individual digital music collections, says Hale. But he argues it would be impossible to dismantle other programs like Gnutella, which functions like Napster but is not maintained by any central server. "The only way to stop (Gnutella) is to turn off the Internet," says Hale.

Gnutella was developed by Nullsoft, maker of the popular Winamp MP3 player. A beta version of the software was released in March, but Nullsoft owner America Online (AOL) -- which will control one of the world's biggest record labels once its merger with Time Warner is completed -- abruptly shuttered the Gnutella site just hours after it went live. AOL won't say what will ultimately happen to the project, but since Gnutella's source code is openly distributed, developers outside of the company have continued to work on the software, and versions of it are still available on the Internet.

WiredPlanet is about to put its own twist on sharing music with a feature it's billing as a "legal Napster." The company has acquired a library of licensed music from which listeners can program their own streaming-music stations. But the newest version of WiredPlanet's MyStation will allow people to upload MP3 files from their personal collections to a WiredPlanet folder on I-Drive. They could then add those tracks to their station, as well as search for and add tracks from other surfers' stations. And because WiredPlanet's server will stream the MP3s from the I-Drive location where they're stored -- rather than make them accessible so they can be downloaded and duplicated -- the firm says it's all legitimate.

Neither WiredPlanet nor I-Drive assumes liability for unlicensed MP3s that someone might upload. "If we stay within the parameters (of the Digital Millennium Copyright Act), the source of the MP3 doesn't matter," according to Hale. The DMCA was passed in 1998 to apply certain copyright laws to Webcasters and other Internet content providers. (For example, as with conventional radio, an online broadcast can't contain more than three songs by the same artist within a three-hour period.) Doug Camplejohn, CEO of streaming-media outfit Myplay, says his company stays honest by letting users share noninteractive DMCA-compliant playlists.

Listeners can choose from preprogrammed stations or assemble one of their own from tracks stored in their Myplay Locker; they can then broadcast their playlist for others.

If a playlist doesn't comply with DMCA rules, a message will come back offering a choice of remedies. Unlike WiredPlanet, you can't skip songs when listening to a broadcast, nor can you search for or add individual tracks to your own locker or playlist from another user's collection.

But even with its limited personalized features and good-sport image, there is a way to share music files using Myplay: If you give someone else your member name and password, he or she can copy an MP3 -- for which you may not own the license -- into your locker. However, Camplejohn claims security controls prevent more than one user from signing onto an account at a time. He adds that Myplay has shut down accounts that it discovered were shared by two or more users.

Clearly, the technical safeguards and rules prohibiting misuse haven't worked.

Instead of trying to stifle the technology, many feel it's time for the major labels to adapt. "The music industry is changing, and distribution is changing, also," says Gil Cordova, CEO of iMesh, a file-sharing network based in Israel.

"As it seems the technology is here and is available, there should be a way to utilize it for the benefit of the industry."

Meanwhile, it seems the lawsuits haven't fazed Napster. Engineers are busy working on a Macintosh version of the software, expected to be released in 90 days. (A beta version is available at In addition, the company announced last week that it would plunk down nearly US$2 million to sponsor a concert tour for rock act Limp Bizkit. In a move not lost on Napster supporters, the concerts will be free to the public.

The music industry will be keeping a close eye on what happens to Napster. Many are betting that the law will favor technology and the will of the music-sharing public. But even if Napster loses this time around, new tools and models are sure to emerge again, challenging labels and artists to rethink their strategy.

"The majors have to be very careful (with these suits)," says WiredPlanet's Hale. "This is their future, too."

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More about America OnlineAOLByersCiscoDiamond MultimediaGigabeatGnutellaMyPlayNapsterNullsoftRecording Industry Association of AmericaSun MicrosystemsTime Warner

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