The record industry scored a major legal victory on July 26, when a federal judge issued an order to shut down Napster, the popular music swapping site. But the industry's elation was short-lived, as two federal appeal court judges granted Napster's request to stay the order, which had been scheduled to go into effect at midnight on July 28. Napster's appeal of Judge Marilyn Hall Patel's ruling will be heard in mid-August, and the site can continue operations in the meantime.

Although the record industry did not succeed in shutting down Napster in this latest round, they are optimistically anticipating a Napster-less future. In a belated effort to profit from the downloading of their products, several major record companies have announced plans to launch their own digital download services. The popularity of Napster has shown the record industry that there is an enormous consumer demand for downloadable music, and widespread dissatisfaction with the high prices charged for CDs. By making individual songs available online, fans can download and pay for only the cuts they want, rather than pay $16 or $17 for a whole CD. EMI Recorded Music, Sony Music Entertainment and Universal Music Group are developing subscription services that allow fans to download encrypted music files for a monthly fee. Currently, EMI and Universal have systems in place that allows users to download individual songs for $1.99 each, a price comparable to a CD purchased in a record store if an entire CD is downloaded. The files will be encrypted, which means users cannot trade the files after they are downloaded. Both companies are offering a limited number of titles on their sites, but plan to expand their offerings over the coming months.

While the record companies play catch-up, Napster clones are proliferating on the Internet. File sharing sites such as Gnutella, CuteMX and FreeNet saw dramatic increases in their traffic in the wake of the injunction against Napster, suggesting that fans of free digital downloads will happily jump to other sites if Napster is shut down. Most of these alternative file sharing sites are decentralized "open source" software providers, without a headquarters or a staff, and therefore will be much more difficult for the record industry to shut down. Napster may be snuffed out by the record industry in the current legal battle, but music file sharing will undoubtedly continue.

On One Hand...

Many users of Napster enjoy the service but are uneasy about violating copyright laws when they download music for free. The record companies' sites will allow music fans to custom mix their own CDs, and get only the songs they want, without cheating the artists out of their rightful share of the profits.

The record companies are waking up to the fact that digital music is the future of their industry. They will create online services that allow fans to get the products they want and allow the artists and record companies to continue making money.

On the Other Hand...

The record industry failed to recognize the significance of file sharing technology until it was too late, and now they will not be able to make up for lost time. Countless alternatives to Napster are available on the Internet, and they will be much harder to control than Napster, which is a centralized company with servers that can be shut down. Software like Gnutella links individual computers to one another, so users can swap files without passing through a central server. There will be no market for the record companies' proposed digital download services, because music fans will still be able to get their music for free.

It was the greed of the record companies that drove fans to Napster in the first place, since many were tired of paying wildly inflated prices for CDs. Until these companies lower the prices of CDs, or make their downloadable music more reasonably priced, few music fans is going to use their sites. Why should they, when they can get the same product for free?

The Internet consulting firm Jupiter Communications predicts that online music subscription sales will grow to nearly one billion dollars in the United States alone by 2005, far more than sales of one-time downloads, which it forecasts will amount to $530 million by then.

After the July 26 injunction against Napster was issued, one Internet monitoring company estimated the site was received 4 to 5 times more traffic than normal.

Both the RIAA and Metallica's Web sites have been victims of hackers since the Napster controversy began. Cybervandals posted the message Leave Napster Alone on Metallica's site, while unusually heavy traffic may have been to blame for the temporary shutdown on RIAA's site on July 28.

Washington Post, ZDNet