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U.S. Copyright Office Rejects Napster's First Line of Defense

Sep 12, 2000, 18:14 (6 Talkback[s])

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By @NY Staff

In the latest legal twist, the U.S. Copyright Office and the Department of Justice have rejected a part of Napster's defense which claims the company is protected by the Home Audio Recording Act.

Both the U.S. Copyright office and the DOJ believe the Audio Home Recording Act addresses a different phenomenon than Napster's file sharing technology, specifically the use of DAT recorders for home taping.

In a press release, David Boies, attorney for the music site, says "we have great respect for the DOJ, but in this instance we believe their position is incorrect."

Ironically, increasing evidence points to file-sharing technology like Napster, as the reason behind growing record sales.

A recent report released from Media Metrix shows a 345 percent increase in unique users on the controversial file-sharing site, www.Napster.com. That's a total of nearly five million U.S. home users, or four times the previous amount.

The six-month study also reports that use of Napster's file-swapping technology grew significantly in the work place as well. Napster users more than doubled from 417,000 unique users to nearly 887,000 users.

In a prepared release Hank Barry, CEO of Napster says "These figures, coupled with the significant increase in CD sales during that same time period as recently announced by the RIAA, demonstrates the tremendous opportunity that Napster offers for music lovers and artists alike."

Barry is referring to a press release the RIAA put out on August 25 that reports CD sales have grown six percent since last year. According to the RIAA, CD's account for 86 percent of the total music purchasing market, a $5.7 billion market.

Both Napster and online research firm Jupiter Communications attribute the boost in music sales to new forms of digital music, file swapping and online radio, among other media. Jupiter analyst, Aram Sinnreich says, "There has been a dramatic change in the Internet music industry in the last year, but it's not in the number of dollars that consumers spend, it's the whole music experience."

"What we are seeing is the opportunity for a new format of product in the commercial music industry, enabled by digital music service providers who can wrap tools, technology and content around the core library of songs."

Sinnreich says sampling music by downloading a copy from the Internet informs user's purchasing decisions, "Record labels and intellectual property owners have demonized various forms of online music sharing, even as it has gained enormous traction among consumers," says Sinnreich. "The truth is that a better-informed user will purchase more music products online and off."

And Sinnreich isn't alone in his assessment of online music as marketing tool. Eric de Fontenay of Musicdish.com, a website devoted to the world of online music, says peer-to-peer networking is here to stay, and that the real problem the music industry is faced with is finding a legal means to regulate such a multi-headed hydra.

File swapping, says Fontenay, is even greater in Europe, especially in France, where the cost of a CD is astronomical and the population is better equipped with CD-burners and other devices that make pirating tunes much easier.

But Fontenay is unclear on the fate of Napster, "I don't think their defense of fair use will wash with the legal system."

And the RIAA has been explicit on the issue of Napster; immediately cease and desist all services.

In a response to Napster's stay of injunction, Hilary Rosen, President and CEO of the RIAA says, "Napster's latest defense is yet another veiled attempt to reinvent itself, its legal position and copyright law. The fact is the law is on our side. We are not suing a technology, we are suing a company that is stealing work that does not belong to them. They cannot build a multi-billion dollar business on the back of other people's works."