BY PAUL MALONEY
The record industry has filed yet another complaint against Napster (here) for failure to properly block copyrighted files from its system. With they way Napster seems to be "spitting on the fire" of illegal file sharing, one has to wonder just how dedicated the company really is to operating legally as a legitimate business. And furthermore, if Napster is really dragging their feet in shutting down the illegal file trading, what are they hoping it will achieve?

When the RIAA first filed suit against Napster over a year ago, Napster's first line of defense was the "safe harbor" provision of the then-newly passed Digital Millennium Copyright Act. The bill allowed that Internet Service Providers and directory companies wouldn't have to police for copyright violations -- and wouldn't be responsible for infringements of copyright unless they had knowledge of the activity and/or gained from it economically. Moreover, ISPs are exempt from legal action for "caching," or holding temporary copies of material, or linking to a site that contains copyright violations.

But the law states that the safeguard is void unless these services act "expeditiously" to remove illegal copies of intellectual property when they are made aware of the infringement. Napster, naturally, has always been aware how people use their service -- and they've hardly been "expeditious" about preventing it. This argument was quickly rejected by the court.

Last spring, the rock band Metallica filed suit against Napster for allowing users to trade the band's songs online. Napster didn't budge, until May when they agreed to block access to over 300,000 Napster users who had been fingered by the band for illegally trading song files. Rapper Dr. Dre soon supplied his own list of users he claimed violated copyrights on his music.

Even so, the company allowed those punished to appeal their banishment on the grounds that they may have been "mistakenly identified." Napster then presented Metallica with the names of those users protesting the ban, and promised that their Napster membership would be reinstated unless the band actually initiated legal action against the individuals -- a pretty unlikely possibility. "Metallica didn't make 17,000 mistakes," Metallica attorney Howard King said at the time. "What Napster has done is create 17,000 liars." (here) More foot-dragging from Napster, the publicity and legal wrangling only popularizing the Napster service, and the file trading increased.

As the RIAA's lawsuit progressed, Napster had another argument. They insisted in July that downloading MP3' s from the Internet isn't illegal since no one is making money on the deal -- it's simply sharing. They buttressed their argument by citing the courts' decision in finding that the Diamond Rio MP3 player, which has no copyguard technology, was not in violation of copyright law (here).

Then the company said their service should be protected by the same line of reasoning that protected Sony when the film industry wanted video cassette recorders off the market. Napster lawyer David Boies even went so far as to propose that major record companies had actually lost the legal right to enforce copyrights, as they had allegedly used them to achieve anti-competitive leverage.

But these arguments also fell flat when Judge Marilyn Patel first handed down her decision in an injunction against Napster. The original order was for only the file-sharing elements of the site to be shut down -- not the "chat" and "new artist" functions. But Napster argued that the different facets of the business were too interdependent to operate individually, and if any part of the site was to come down, it would all have to. For this reason, the ruling was too broad, argued Napster (a copy of their briefing is here).

Even to this point, Napster continues to protect itself behind legal nuances and technicalities in order to delay what most believe is the inevitable: cessation of the service as it has existed. Napster has brought aboard the "big guns" of former US prosecutor Boies and record industry vet Joel Klein (who is actually employed by Bertelsmann, the only major record company to align itself with Napster). And there was the almost laughably unrealistic $1 billion settlement offer.

Napster has said in court that it can disable users on the system, but it cannot exclude particular songs or artists from its database (here) They said it again when EMusic asked Napster to prevent EMusic files from being traded. Then, facing a shut down in court at the beginning of this month, Napster said it would comply with the injunction and prevent the trade of copyrighted files. For what "couldn't be done," Napster promised a software solution over the weekend. It's even interesting to note that the most short-sighted of us could've seen file-filtering as necessary by some point -- yet Napster, in court for a year now, needed the weekend to create the filtering software -- an accomplishment they had called, of course, impossible.

Even so, the file filtering process is based on file names, not actual data. This makes circumventing the filters basically as easy as changing or encrypting the file's name. Though the technology exists (according to companies like Audible Magic, and EMusic's "acoustic fingerprinting" system -- here) to identify and filter actual song files, Napster hasn't begun using it yet. Perhaps that would only be too effective?

The spirit of the court's order seems to be obvious to everyone but Napster. Napster has complained that the record company-supplied list of songs and file names to be filtered was incomplete and insufficient, thus full complicity on their part wasn't possible. They're being the good guys here!

The question remains: what does Napster have to gain by being dragged kicking and screaming towards legality? To the best of our knowledge, they're not making any money -- in fact they're just burning capital (along with legal costs) as it is. Do they think a delay might allow them enough time to convert to a subscription model without losing the traction they've gained?

If Napster can actually switch to a subscription based model before their windows are boarded up, and convert a significant number of their users to customers -- now THAT would be Napster's best trick yet!

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From TheStandard.com: "Sometimes the Web is about entertainment. But more often, it's about finding what you want and moving on. Many sites would do well to keep that in mind. Almost 70 percent of consumers recently polled by Jupiter Research said they leave Web sites when they can't quickly find what they're looking for; likewise, they don't have patience for disorganization or unnecessary bells and whistles.

"In fact, most consumers can't take advantage of enhanced Web site designs. According to Nielsen NetRatings, little more than 1 in 10 U.S. households online access the Web through a high-speed connection – a necessity for viewing streaming files and other graphically intensive features. And 84 percent of users say that slow download times, which are magnified by graphics and animation files, send them away. That's more than the percent of Net users who bail because they can't find what they're looking for.

Read the rest of this article here.

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From the press release: "GlobalMedia.com announced that as part of its continuing efforts to streamline operations it has closed its offices at 400 Robson Street and is continuing to serve its customers from shared facilities. The Company plans to relocate its operations to a smaller permanent facility pending the outcome of its March 30, 2001 Nasdaq delisting hearing.

"'The 13,000 square foot 400 Robson facility was simply too large and expensive given GlobalMedia's current staff size of eight,' stated GlobalMedia.com's president, Michael Metcalfe. 'GlobalMedia believes that the interim move to shared facilities is appropriate given its current needs and is necessary for it to achieve its long-term objectives.'''

Read the press release here.

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From AdWeek.com: "Jupiter Media Metrix Inc., the biggest measurer of online activity, has reached a settlement in a patent-infringement case, essentially forcing one of its leading competitors, PC Data Inc., to get out of the business of tracking Internet usage, Wednesday's Wall Street Journal reported.

"And Jupiter Media Metrix isn't stopping there. The New York company Tuesday filed a lawsuit against two other competitors, NetValue SA and NetRatings Inc., alleging the companies are also infringing its tracking technology...

"The PC Data settlement stems from a lawsuit filed by Jupiter Media Metrix in the U.S. District Court in Wilmington, Del., last September. In that suit, Jupiter Media Metrix alleged that PC Data's system for tracking and analyzing users' online habits violated a broad patent it obtained for such a system.

"Like its competitors, Jupiter Media Metrix runs a 'panel' consisting of tens of thousands of Internet users who have installed a special software program on their PCs to track their every move online. The company, the largest in the online measurement area in terms of revenue, uses the data to project the behavior of Internet users at large, selling the resulting research -- including lists of the most visited Web sites -- to investment banks, high-tech companies and a host of other customers.

"The Jupiter Media Metrix patent, issued last September, describes a system that 'measures and reports the use of a personal computer by a user through a log file,' and says the log files, or computerized records, 'can report on the applications used and communication functions engaged in by the user.'"

Read the full story here. Both NetValue and NetRatings now say the suits are without merit -- read more in DotComScoop.com.

March 30-April 4	MOBE: Universal City, CA
April 2, 2001	Digital Media Outlook: New York, NY
June 20-22	Streaming Media West 2001: Long Beach, CA