The End of Napster As We Know It

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Napster founder Shawn Fanning listens to CEO Hank Barry during a news conference

Friday, in a San Francisco courtroom, Napster wriggled out of the guillotine yet again — in exchange for getting its hands chopped off.

David Boies, who's getting more accustomed to legal surrender these days than he'd probably like, announced in Judge Marilyn Patel's courtroom Friday that Napster would this weekend install a "filter" designed to prevent users from downloading any of the 6,500 infringed-by-Napster-users songs that the Recording Industry of America has been kind enough to provide. Negotiations will continue next week, but the war would seem to be over.

TIME Silicon Valley correspondent Chris Taylor takes us through the implications. So what does this mean for Napster?

CT: The Napster we know and love is dead.

This was a strictly legal solution, designed to get the RIAA lawyers off its back at any cost so that Patel wouldn't shut down the service outright. The RIAA was holding all the cards, legally, and Boies knows from his IBM and Microsoft battles how much judges hate arrogant technology companies. So he did what he had to do to keep the site alive in any form.

There will still be a Napster, and you'll still be able to listen to music, but it'll be a closed system. Downloading songs onto your hard drive will theoretically be out of the question.

So why compromise? Why bother to stay in business at all?

CT: Napster's ultimate dream is to be a kind of AOL, to use its brand name and market penetration to be a legitimate pay-for-play community sometime in June, with the blessing of the record companies. But the RIAA wouldn't budge; they wouldn't wait until then because they knew they didn't have to. So Napster is going to try to just limp along until summer, and hope their users are still around when they've actually got a revenue model that passes muster with the RIAA.

And what are the odds of that happening?

Well, Napster's rivals are certainly rubbing their hands with glee, because Napster, for the next few months, doesn't have anything at all to offer. People who want to download free music won't be able to get it there, and those who would be willing to pay for it won't be able to that either, not until June.

Is this the end of file-sharing?

CT: Absolutely not. Johnny Deep at Aimster insists his service is legally watertight because it's completely decentralized — and the appeals court made a very clear distinction that a site isn't responsible for copyright infringement if it has no way to monitor or stop it. Most of the other sites — Gnutella, BearShare and the rest — look to have that same built-in protection.

There's even been talk of AOL-Time Warner buying Aimster, which would really break this thing open. Because nobody's going to take on AOL. [Note: As the parent of, AOL Time Warner owns this article.] Realistically, technology is going to find a way to stay ahead — the RIAA is never going to be able to stop this from their end. You can't encrypt sound.

Is there any other way?

Well, the music labels are already going ahead with development of their own online music services, which is another reason they had no interest in meeting Napster halfway. Whether those will ever be able to compete with free file-sharing, it's hard to say. There's a certain appeal to physically owning a CD, with the liner notes and everything, and of course there's the appeal of something that's free. Paying for online music might be the worst of both worlds.

There's talk among the geeks out here about something called CPRM, which is something that IBM is working on. Basically, it's a new kind of hard drive that would block the download of any copyrighted material.

Sounds a little Orwellian.

Very Big Brother. But the reality is that there are three major manufacturers of hard drives, and if they get together it'd pretty much be a reality. Certainly there wouldn't be a legal problem with that kind of protection.