From AP: "A federal appeals court ruled Monday that the music-swapping service Napster must stop trading in copyrighted material and may be held liable for 'vicarious copyright infringement.'

"Napster must prevent users from gaining access to copyrighted content through its lists of songs archived by the service's users, the 9th U.S. Circuit Court of Appeals said. Napster officials have said such a ruling could force them to shut down the service.

"In a 58-page opinion, a three-judge panel told a lower court judge to rewrite her injunction to focus more narrowly on the copyrighted material. The panel also directed the Redwood City-based company to remove links to users trading copyrighted songs stored as MP3 files.

"'This is a clear victory. The court of appeals found that the injunction is not only warranted, but required. And it ruled in our favor on every legal issue presented,' said Hilary Rosen, president and chief executive of the Recording Industry Association of America."

Read the story in Yahoo here.


Reprinted from this morning's issue...

From the Napster homepage: "The 9th Circuit Court of Appeals in San Francisco will announce its decision regarding our appeal of the court's injunction in the record companies' lawsuit against Napster on Monday morning, February 12, 2001.

"We have great confidence in our legal position. Napster expects to post a statement about the decision shortly after the court issues its ruling. We appreciate your support and will keep you informed."

Please feel free to check back with RAIN later today for coverage and analysis of the court's decision. We expect an announcement by 12 Noon CST.

From ZDNet.com: "It was a song downloading frenzy Sunday for millions of music-lovers logging on to Napster, fearing a federal court may soon shut down the popular online song-swapping service that has record companies up in arms.

"Four months after an Oct. 2 hearing in the landmark copyright infringement case, a three-judge panel of the 9th Circuit Court of Appeals in San Francisco will issue its ruling Monday on the recording industry's request that Napster be ordered to stop enabling users to swap songs for free.

"Fans began flocking to Napster's Web site Friday immediately after the appeals court said it would announce its opinion, deciding the near-term fate of the service. 'Almost 10,000 users were logging on to each of Napster's 100 servers on Sunday at any one time,' said Bruce Forest, an intellectual property protection specialist for Sapient consulting company, adding that nearly 2 million songs were being swapped on each server."

Read this story here.




The chance that free file-trading service Napster may be shut down today has led to (as of 10:23 AM CST) a 46.15% hike in the stock price of digital music retailer EMusic.com.



The availability of free music from Napster had been driving EMusic into the ground. The company had a reported loss of 21-cents per share in the fiscal second quarter. A reported loss of $191 million after a re-evaluation of the company's assets and holdings was a factor in the firm's non-renewal of funding for the Internet Underground Music Archive (IUMA), reported las week. EMusic had acquired the pioneering Internet music site in June of 1999 (in Wired News here). This past January, EMusic cut its own staff by 36-percent.

Reports say Emusic is striving towards profitability before its own cash runs out, which may be in about a year.

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It appears that Everstream-programmed FMCities.com has gone down. A note on the site says "FMcities.com & FMcanada.com has (sic) temporarily susended (sic) operations. We plan to resume as soon as possible, so please be sure to check back. We're sorry for this inconvience (sic)."

The network of what was to become over 1300 Internet-only "stations" was launched in September (See RAIN coverage here and here) by Canadian radio owner Tim Martz. The plan was to add localization to each set of 50 channels directed at local U.S. and Canadian markets.

The FMCities player was a "shell" on top of the normal complement of Everstream stations.

Martz explained his business model to RAIN in September. "If I can be in 50 cities by the end of October with an AQH of 100 in each market, which I think is reasonable based on what we're seeing in Canada, I'll have an AQH of 5,000 for the whole company. So if I can sell it at a $30 or $40 a thousand... Hell, I'll take a couple hundred bucks a spot! If I can run four or six of those an hour, then it starts to become attractive in terms of the revenue stream. And if the audience grows from 5, to 10 to 50 thousand, that's where it starts to become a very attractive, very profitable business."

Martz believed that the visual element, along with the "click-through" capability of ads on Internet radio, would yield CPMs "significantly higher" than those of traditional radio.

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From RBR: "In the wake of the recent US Copyright Office’s initial ruling in favor of RIAA, allowing performance royalties to be charged to webcasters, we reported streaming provider StreamAudio will obtain and pay for the license for sound recording performances as outlined in the Digital Millennium Copyright Act (DMCA). It turns out Yahoo! Broadcast and Coollink Broadcast Network (CLBN) will also pick up the fees. Both, like most streaming providers, have picked up publisher/composer fees all along.

"Michael Peterson, SVP, Streaming Media Group, CLBN, says his company has already been picking up BMI, SESAC and ASCAP composer and publisher fees and plans to do the same for performance royalties.'

"Peterson tells RBR between BMI, ASCAP and SESAC, they average 2.6% on the gross revenues side and about 3.5% on net revenues. However, 'RIAA came out of the chute first at 41% based on the cable model and then rescinded and came back at 15%. That is not economically feasible for companies like ours or broadcasters to have to incur,' adds Peterson. 'So I think the arbitration process and the parties represented are optimistic those fees will be negotiated somewhere south of 6% as a total. A lot of traditional broadcasters have pulled back, saying "this is an extreme cautionary flag that we need to consider our efforts into streaming.”'"

Read this story here.

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Radio Ink this morning is running the transcript of a weekend interview with SurferNetwork CEO Gordon Bridge, commenting on the new of his company successfully acquiring the assets of bankrupt streaming provider BroadcastAmerica (reported in RAIN here). The following is a quote from Bridge on how the relationship between the two companies became acrimonious.

From Radio Ink: "In early December, we proposed to BA (BroadcastAmerica), applying the initial $1 million loan, combining the two companies, paying 100% of the so-called post-BA petition expenses (several hundred thousand dollars), providing cash and stock to give the pre-petition creditors a chance to recoup 100% of the monies owed by BA, and even equity in the new combined company to the BA shareholders.

"This would have allowed BA to successfully exit chapter 11, be a going concern in Portland, and combine with SurferNetwork. This proposal was not accepted by BA. Instead, they apparently signed an LOI with another company to combine. That deal was never consummated.

"In retrospect, not accepting our offer was a very costly decision for all concerned — BA employees, its shareholders and its creditors. Instead, the employees were laid off one week after our offer was not accepted, the BA shareholders ended up with absolutely nothing, and the creditors, based upon what was discussed during the hearing last week, are also likely to get nothing."

Read this story here.

February 21-25, 2001	The Gavin Seminar 2001, Miami, FL
February 26-28, 2001	Broadcasters Website Sales Conf. 2.0, Tempe, AZ

From the press release: "MP3.com, Inc. announced a free developer workshop designed to enable software developers to harness the power of the digital music space to potentially increase value and create new revenue. The workshop is scheduled to take place at MP3.com headquarters in San Diego on February 15 from 3:30 - 6:00 PM...

"The workshop was created to provide developers with technical overviews of free digital music tools and services available from MP3.com. MP3.com's engineering experts will teach software developers to integrate digital music technology infrastructure into their own applications, providing added value and increased functionality."

To register for this free event, click here. Read the press release here.