The fate of Napster Inc. could be decided Tuesday when an appeals court in San Francisco is expected to rule on the controversial music-swapping service that has taken the world by storm.
The 9th U.S. Circuit Court of Appeals issued a brief notice on its Web site Friday announcing that a three-judge panel would issue its ruling Monday, US time. The panel has been reviewing a lower court opinion that effectively would have shut Napster down. The appeals court prevented that order from taking effect until it had a chance to review the injunction.
The record industry contends in a lawsuit filed in December 1999 that Napster, which enables millions of users to download songs for free, infringes upon the copyrights of labels and musicians. The Big Five record labels, which include Bertelsmann AG's BMG Entertainment Inc., Universal Music Group Inc., Warner Brothers Music Group Inc., EMI Group PLC and Sony Music Entertainment Inc. (SNE) , are requesting a ruling that would shut Napster down permanently. U.S. District Judge Marilyn Hall Patel said in July that the labels were highly likely to attain this goal, and ordered Napster to cease trading copyrighted songs as the matter proceeded. The appeals court ruling stayed that order.
With almost no marketing, Napster has become a phenomenon, claiming 50 million enthusiastic subscribers. The service threatens to turn the decades-old recording industry on its head, by introducing a fundamentally new way for musicians to distribute their music. So far, Napster has not figured out a way to charge users for the music they download, a shortcoming that has led to charges that the swapping service violates copyrights. Napster recently entered into a deal with BMG, whereby BMG will give Napster access to its entire catalog if the service can figure out how to charge its customers, possibly in the form of monthly subscription fees.
Friday's appeals court notice did not indicate how the panel would rule. If the court affirms the earlier ruling, Napster could be forced to shut down as early as Monday. Alternatively, the appeals court could decide to overturn the ruling. It could also send the decision back to Patel for further guidance.