Singing the Blues to the Tune of Napster & MP3.com
A one, two punch by the judicial system on behalf of TVT & the major labels!
This is not what Napster must have had in mind... First Hank Barry shows up in front of the Senate, next Napster acquires Gigabeat technology (as well Gigabeat's executive team) to improve its filtering system, plus responses from its Gracenote partnership were positive - but as the saying goes (with a little editorial liberty) all good things must go bad, at some point, some time.
US District Judge Patel, in a hearing on Tuesday, quickly put an end to any smiles on the faces of Napster execs, calling Napster's efforts at filtering copyrighted music on its system "disgraceful." While not ordering the immediate shutdown of Napster, the Judge has sought out technical expertise on the issue through court-appointed mediator and technology expert, A.J. "Nick" Nichols. Napster's fate depends on Nichols, who assumes the same role in Sun vs. Microsoft, determining that the company has done EVERYTHING it can to block copyrighted works presented by the labels. Obviously, Patel did not feel that Napster's claims of incomplete removal requests by the labels was justification for its own efforts to remove such files.
"Today's hearing reflects Judge Patel's determination to ensure that the Court's injunction is obeyed and that Napster's infringing conduct comes to an end. Notwithstanding Napster's nitpicking over every detail of the Court's Order in an effort to resist compliance, we are confident that the Court will make the injunction effective," said RIAA Senior VP and General Counsel, Cary Sherman, in response to Tuesday hearing.
Before the hearing, Napster released a Q&A on its compliance to the Court order, stating that "From March 16 to April 2, Napster has excluded from its index, approximately 87,000 unique artist/song title pairs and more than 550,000 normalized file names. In total, Napster has now filtered approximately 311,504 artist/song title pairs and approximately 1,717,602 unique file names." Furthermore, Napster said that they are taking great measures to follow the Courts's order: "Since the March 27 filing, Napster has added a third filter to its system. Whereas the first and second filters prevent files with a specific word combination from being indexed when a user logs on, the third filter blocks searches for certain artist/title pairs."
If Napster cannot successfully filter music from its site, as ordered by the Courts, then it might have to take more drastic measures. For example Napster could bar users who trade in copyrighted files from the service, and not the half-hearted attempt it made at the behest of Metallica. As if to forewarn the possibility, the Napster compliance Q&A added the following: "Napster has also amended its terms of service to advise users that if they intentionally change or otherwise disguise the names of their files in an attempt to circumvent Napster's filters, their access to the system will be terminated.
But of course, if it starts barring en masse it users from the service, the exodus to alternative file sharing networks will only become more pronounced. The question really is, whether Napster can buy enough time until it is able to roll out its complete "legal" p2p system. However, many in the industry are already saying that Napster's efforts are "too little, too late," and that it is only time before either the major label subscription efforts or a competing legal p2p system takes hold among consumers.
And not to be beaten in a roller coaster ride of a week, what was to be a victory for MP3.com quickly turned into a Waterloo. On Friday, April 6, the jury in a copyright lawsuit by New York based TVT Records against San Diego base MP3.com, announced an award of $296,873 to TVT for copyright infringements made by MP3.com's My.MP3 service. After press reports on the award, the Jury over the weekend contacted the presiding judge in the case, U.S. District Judge Jed Rakoff, explaining that they had miscalculated the damages in the case. An error in math by the jury misappropriated the damages by a factor of 10. TVT Records was now to receive $2,968,730 - a BIG difference, and no longer a clear victory for MP3.com. MP3.com was quick to praise the initial verdict, but maybe it acted too quickly. First reported by Inside.com, TVT complained that when MP3.com released a press release on Monday touting their initial $300,000 victory, they really knew that there was an error in the calculation due to the Judge having called in all the jurors for an afternoon hearing that Monday before the press release was to be distributed. Miscommunication among various divisions of MP3.com or an attempt to soften the bad news that was bound to come?
CNET News.com reported that, "Two jurors left voice-mail messages Friday evening for a court clerk indicating that the $3,125 figure 'was supposed to be $31,250,' Rakoff said. He said it was possible that jurors had arrived at a grand total during deliberations, then 'divided it wrongly.'" For MP3.com, $3 million by itself is not much, especially compared to the settlements with the major labels, however, based on the success of TVT Records, other indie labels infringed by the My.MP3 service might see MP3.com as a prime target, especially with the Courts on their side.
What this means for MP3.com, Napster and other dot-coms is what has been obvious for years now: the labels are flexing their muscle against any potential threat to their control over distribution, through their deep pockets, extensive lobbying of congress and "jihad" style use of the courts. The courts are finally coming around, and little is expected to come from the Legislative branch of government despite Rep. Boucher's best efforts. With the recent deals designed to release major label music online, Congress will be less apt to get involved in the copyright fracas reasoning that the marketplace, with the help of the courts, will resolve any outstanding issues. After all, the Congress has more urgent matters to deal with such as tax cuts, the budget, China, ...
Mr. Sherman hinted at the new strategy by the labels to preempt action by Congress. "From our perspective, what's important now is the continuing stream of new deals being announced by our companies to bring innovative, online subscription services to consumers."
MP3.com - www.mp3.com
Napster - www.napster.com
TVT Records - www.tvtrecords.com
U.S. District Court - www.cand.uscourts.gov/
Related MusicDish e-Journal Articles:
» March Madness in April? Napster & RIAA Continue to Duke it Out! - Artists and Labels: Place Your Bets... (2001-04-03)
» Napster Gets a Reprieve from the Law (2001-03-12)
» Judge's Ruling Furthers Marriage of Napster and the Recording Industry - If Digital Music is the Drug and Napster the Needle, Then Who's the Pusher? (2001-03-06)
» The Napster Decision: Where do we go from here? - Alternatives to Napster - Friends of Napster - Enemies of Napster (2001-02-15)
» MP3.com & Universal - What's Behind the Deal?
- The Major Labels' Strategy Becomes Clearer
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