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In a closely watched ruling, a three judge appellate panel in San Francisco Feb. 12 ruled that Napster must quit making it possible for people to easily transfer copyrighted music, but sent the case back to lower court to rewrite an injunction recording companies had won earlier to more narrowly tailor it toward copyrighted works.
Has Napster hit the wall?
The recording industry issued a statement calling today's opinion of the 9th Circuit Court of appeals a "clear victory."

The Napster case had drawn the attention of book and magazine publishers, filmmakers and broadcasters that feared that any decision allowing music to be freely exchanged without royalty payments could set a precedent in other publishing areas. In the music realm, the decision is likely to mean that consumers will either have to pay to download copyrighted songs, or have to visit sites that through advertising, access fees or sponsorship can support payment to artists. The decision, however, also is likely to mean that Napster will continue to exist. Bertlesmann AG's BMG Entertainment which has a deal with Napster to develop a site on which users can be charged, said it remains committed to working with Napster to develop such a site.

Napster, the music file-sharing service itself, passed the 9 million home users mark in December 2000, according to measurements by Jupiter Media Metrix. The number of U.S. home users of the Napster application increased from 1.3 million in February 2000 to 9.1 million in December 2000, an increase of 724%, an increase that Media Metrix says underscores the mass-market potential for digital music. With 11.2% of U.S. home users using Napster in December 2000, Napster now ranks as the 27th most popular home application, according to Media Metrix ratings reports. At work, the number of Napster users increased from 417,000 users in May 2000 to 1.6 million in December 2000.

Copyright February 2001, Crain Communications Inc.

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