While the appellate court gives it a reprieve, a class action suit brews that could ruin the company.
Déjàvu all over again. Last summer, U.S. District Judge Marilyn Patel ruled in favor of the Recording Industry Association of America (RIAA) and shut down Napster, but the 9th U.S. Circuit Court of Appeals overturned her ruling. As a news story on our site today describes, this summer is a mirror image of last, for Napster and its millions of users anyway. Once again, Patel shut down the song-swapping site, and once again the appellate court reversed her order.
Though Napster is noncommittal about whether to pick itself back up and start enabling song swapping again, the appeals court ruling is good news for music lovers in search of tunes on the Internet. I suspect Napster would not have appealed if it did not want to reboot its servers, which have been down since July 2. And the precedent set by Patel’s ruling if allowed to stand would have been intolerable for innumerable Web sites, not just Napster clones, but all content sites. In short, when Napster representatives claimed they could only screen out 99 percent of all copyrighted works on its services, Patel said it wasn’t good enough–they needed to be able to screen 100 percent of the offending songs. This is impossible, because the only algorithm that can filter out illegal material with 100 percent accuracy filters out all legal material as well.
Not only would Patel’s order have killed Napster, any site that posts content from its users would be at risk to similar suits based on the precedent her ruling sets. Consider Slashdot, which posts millions of pages of commentary from its users. It is likely that some of this commentary is stolen from published works, and therefore illegally published. If Slashdot were ordered to clean out of its pages 100 percent of its copyrighted works or face shutdown, it would be down for good. Patel’s idiotic order could have crippled the Web. We owe Napster a debt of gratitude for pushing it to the appeals court.
As if Napster didn’t have enough to worry about with the zero tolerance of the RIAA and Judge Patel, a class-action suit that could siphon up to $12 billion out of any possible revenues the company has is nearing trial. According to a second story on our site today regarding Napster, Carey Ramos – the lawyer representing the musicians listed in the suit – is willing to deal for less than the $12 billion for past work. The condition for settlement would force Napster to pay the musicians for future downloads. Reading the story, it looks like any settlement would bleed Napster dry.
I wonder what incentive Napster has for fighting these cases and staying up. Any money obtained from song swapping will be sent to publishers and musicians. There is no way you can make up a $12 billion debt, not counting any financial penalties from the RIAA. If I were Napster’s CEO, I would simply sell off the servers, flip off the suits, and go to work for Fasttrack. That way, none of the publishers would get their way and they all would anger their customers way beyond any benefit of these legal proceedings.
James Mathewson is editorial director of CosmputerUser magazine and ComputerUser.com.