Song, Sung Blue.

Napster ruling upholds copyrights, blocks server-based song swapping.

In an expected but nonetheless crucial ruling in the battle over copyright law on the Internet, the 9th Circuit Court of Appeals in Los Angeles has determined that Napster.com routinely violates copyright laws and must significantly change its technology, or cease operations.

The ruling is a huge victory for the Recording Industry Association of America (RIAA), for the record companies it represents, and for many artists (Metallica most vocally) who claimed that Napster pirates their music and prevents them from earning royalties. It is a major defeat for Napster and will likely force the company, which became the fastest growing Web site in history, into bankruptcy.

"We are disappointed in today's ruling," Napster CEO Hank Barry said in a statement. "Under this decision Napster could be shut down--even before a trial on the merits. The Court today ruled on the basis of what it recognized was an incomplete record before it. We look forward to getting more facts into the record. While we respect the Court's decision, we believe, contrary to the Court's ruling today, that Napster users are not copyright infringers and we will pursue every legal avenue to keep Napster operating."

The ruling said that Napster must regularly search its site for copyrighted material and remove it, though recording companies are required to instruct Napster as to which copyrights are being violated. While the ruling will likely force the company to create an industry-approved version of its site, Napster has been pursuing such a solution for some time, even though the financial viability of such a site model is unproven. Company founder Shawn Fanning reiterated that Napster would continue to pursue distribution agreements with music publishers and create a service that makes royalty payments to musicians.

The real effects of the ruling on the Web's music swapping community are a bit less clear. Server-based music swapping sites will likely be less commercially viable and visible, and be relegated to underground and Usenet status. But sites like Aimster and Gnutella that bypass central servers for peer-based file swapping are more difficult to police and, assuming they are able to stay in business, will probably live on. Indeed, P2P networking has already moved into the mainstream with technology from companies like Groove Networks. Court ruling or not, peer-to-peer networking technology is out of the bag, and only strong encryption built into music and video files is likely to prevent users from taking advantage of it.