From Business 2.0: "Business2.0 Online has gathered reactions from digital music industry pundits about the federal appeals court's decision to send the Napster case back to the district court to modify its injunction against the file-sharing software.

"P.J. McNealy, analyst, Gartner Group: 'The Digital Millennium Copyright Act (DMCA) stood up to its first test. It shows that the language drafted back in 1998 may be pretty good. However, it is likely that this won't be the last time the DMCA is challenged.'

"Phil Leigh, vice president of Internet Research at Raymond James & Associates: 'Here are three plausible scenarios: Congress gets involved to require mandatory licensing. Erstwhile Napster users go to various "workaround" sites like Aimster and iMesh, or use software like Gnutella or Freenet. Or renegade versions of Napster may start up in political jurisdictions that have a different interpretation about the rights of record label companies.'

"Larry Miller, President of Reciprocal Entertainment: 'It's somewhat unfortunate that once Judge Patel retools her injunction, Napster will likely be shut down before it has an opportunity to migrate millions of users from the free illegal service to the paid legitimate one. Consumers will then likely turn to other illegal services, which might set the industry as a whole back even further.'

"Jeremy Silver, executive vice president of online music community Uplister: 'But as long as Napster is operating as a free service it's killing the digital music business. Today's ruling was a step forward for online and traditional music companies to develop systems that fulfill consumer demand AND properly compensate artists and rights holders.'

"Philip Corwin, a partner at Butera & Andrews, a law firm in Washington, D.C.: 'The demand for music is still there, and what Congress will be looking for now, with Napster gone, is the market moving to meet that demand? Or are the labels saying, "Whew, we dodged another bullet, now we can just take it real slow, and do it our way and no cross-license."'

"Steve Gottlieb, founder and president of the largest independent record label, TVT Records: '"Now that we have a ruling, all content creators should join together in a moratorium of further legal action against Napster, and get with the program of expanding Napster's potency as a legitimate and mutually beneficial way for consumers to experience music.'"

Read the entire story here. Read the opinion of the U.S. Circuit Court of Appeals for the 9th Circuit here. For more on this story, please see "News Excerpts" below.

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Last week, we were anonymously forwarded a letter that was allegedly from SurferNetwork (here) to their new affiliates that had been clients of GlobalMedia. We were led to understand that these stations' streams had been unexpectedly terminated by Activate, due to non-payment by Global. We received several other e-mails supporting this.

After running the piece, we received the following:

The letter forwarded to you regarding discussions between Activate and SurferNetwork is inaccurate. These two companies are continuing to have constructive discussions regarding working together. Nor were the terminations "unexpected" as cited in the letter. Perhaps the engineer who authored the letter was not aware of these facts. Regards -- Stew Chapin, SVP, Activate

From RBR.com: “'To our surprise, and in an act that we think is completely inappropriate, Activate did shut down a bunch of streaming for what are now our customers. In my opinion, all this does is penalize the individual radio stations for things that are completely beyond their control. We’ve been unable to come up with a resolution. We’ve had some discussions about reactivating radio stations on a one-at-a-time basis, where the stations would kind of get involved in the transaction itself,' SurferNetwork CEO Gordon Bridge tells RBR. 'It’s a real bad situation and it would appear that it is a situation having nothing to do with us, but the prior relationship.'”

See this story here.

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Stock reaction may not be justified
From Internet Stock Report: "By the time Monday's final trading bell rang, the two top gainers on the NASDAQ were EMusic.com (NASDAQ:EMUS, see RAIN coverage here) and ARTISTdirect (NASDAQ:ARTD), which rose 69.2% and 40.0%, respectively. Another online music company, MP3.com (NASDAQ:MPPP), saw its shares climb a healthy 8.1%. Trading volume for all three was much higher than usual.

"Maybe these traders are just knee-jerk opportunists. If so, they are in for an unpleasant surprise, for none of these three companies will benefit from the court's move to uphold a lower-court ruling that Napster encourages and abets copyright infringement. In fact, the decision underscores the obvious - that the five major music publishers are in the process of winning the legal fight to control the distribution of their copyrighted material over the Internet."

Read this story here.


Catching copyright violations up to record companies, not Napster
From The Street.com: "But though Napster may be down, it's not out of the picture. First of all, it looks as if record companies want to stop Napster from enabling its users to allegedly violate their copyrights, they'll have to ask.

"The appeals court ruling, which nixed Napster's attempt to avoid a preliminary injunction ahead of a copyright infringement trial, instructed the lower court to come up with an injunction short of putting the burden on Napster to prevent all copyright violations -- a burden that's been seen as enough to shut the service down.

"Instead, the court places the responsibility on the people suing Napster to notify Napster of the existence of their copyrighted works on Napster's system 'before Napster has the duty to disable access to the offending content,' the court wrote in its opinion."

Read this story here.


Ruling a step back for Bertelsmann
From the BBC: "Speaking in the aftermath of the court ruling, Bertelsmann eCommerce group chief executive Andreas Schmidt said the company planned to proceed with talks to introduce a fee-based service, remaining confident that other music companies would join the scheme.

"Had the ruling been more favourable to Napster, 'it would have been a big incentive for the other labels to embrace a system they were suspicious about. Now, Bertelsmann will have to negotiate with the other labels on an equal footing,' the Webnoize analysts said."

Read this story here.

Also, please see excellent pieces in ZDNet.com here and here, Billboard here, and a series of articles in CNetNews here.

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