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FROM BOARDROOM TO COURTROOM, KRON TAKES CARE OF BUSINESS

239 F.3d 1004 (9th Cir. 2001)

Napster Was Here And Then Gone But Its Lessons Remain

Napster was the name given to 3 music-focused online services and pioneered peer-to-peer file sharing. Emphasizing the sharing of audio (digital) files, the format used the MP3 format.

When the company ran into legal problems centering on copyright infringement, operations stopped and Napster was acquired by Roxio. In its reincarnation, Napster morphed into an online music store until it changed hands agon on December 1, 2011.

Founded by Shawn Fanning and Sean Parker, the service started operating in June 1999. The technology permitted persons to share their music files with other participants easily and within the site.

Before Napster, there were already other networks which distributed files across the Internet. IRC, Hotline and Usenet were the three biggest players. Napster found its niche by specializing in MP3 files and providing a user-friendly interface. At its zenith, Napster claimed over 80 million registered users.

College high-speed networks became overloaded, and many schools blocked Napster’s use.

Metallica found a demo of their song, “I Disappear,” was available on Napster even prior to official release. Radio stations throughout America played Metallica’s song, and the group found their entire catalog of studio material was available as well.

On March 13, 2000, the group filed a lawsuit against Napster and a month later Dr. Dre, a rapper, filed a similar lawsuit.

In March 2001, Napster settled each suit and was shut down by the Ninth Circuit Court of Appeals.

A&M Records, and other recording businesses, sued Napster on grounds of vicarious copyright infringement. Napster lost then case and appealed.  The court laid out some guidelines for continued use which Napster failed to follow. In July 2001, the service was closed and a year later announced it was bankrupt.

Streisand Effect

The Streisand effect is a phenomenon whereby an attempt to hide, remove, or censor a piece of information has the unintended result of publicizing the information more widely, usually facilitated by the Internet. It is a reflection of psychological reactance, wherein once people are aware that some information is being kept from them, their motivation to access and spread it is increased.

It is named after American entertainer Barbra Streisand, whose 2003 effort to suppress photographs of her home in Malibu, California, inadvertently drew more public attention to it.

On December 7, 1999, the Recording Industry Association of America filed against Napster. The plan backfired as the service grew bigger as the trial gave the service huge publicity. Soon, millions flocked to it.

An injunction was issued on March 5, 2001 which ordered Napster to prevent copyrighted music from being traded.

Napster appealed and told the court it had developed the technology to block the transfer of 99.4% of infringing material.

The court told Napster’s attorney that 99.4% was not good enough.

The Takeaway

Napster shut down its network in July 2001 in order to obey the injunction. Two months later, Napster agreed to pay music creators and copyright holders a $26 million settlement and ultimately was sold to Bertelsmann, a German media firm, for $85 million.

© 2012 Daniel Kron, Esq., all rights reserved


New York commercial litigator Daniel Kron, Esq - logo

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