Q&A: What next for Napster?

It is only a matter of time until Napster is shut down

News Online's Kevin Anderson asked Webnoize analyst Matt Bailey and researcher Gregor Rhoda what the court's decision means for Napster, its users and the recording industry.

What now for Napster users - is their Napster software immediately useless?

It seems it's only a matter of time until the service is shut down, said Matt Bailey.

The case has been sent back to the district court because the injunction was deemed overly broad, but the appeals court also said that the recording industry made a good case that Napster knowingly contributed to copyright infringement.

Napster said in a statement before the ruling was handed down that even if the injunction was re-instituted that it would take days or possibly up to a week to close the service.

Is this the end for Napster, the company?

Napster has promised to appeal the decision, and so the current court battle will continue. It is possible that Napster in its current form could live to see another day, Mr Bailey and Gregor Rhoda said.

Napster also still has its partner Bertelsmann, the German media giant, which loaned Napster $50m in an agreement last autumn.

This does put more pressure on Bertelsmann and Napster to develop the subscription-based service that Bertelsmann said it would roll out in June.

At the core level, Bertelsmann and Napster will have to be able to monitor the content traded over its network and apply rules to that content.

"On a very simple level, they have to know what is being traded and set what users are allowed to do with that content," they said.

For instance, some material may have an expiry date so that the song file can only be listened to for a set period of time, they added.

Are there other services or software packages that could replace Napster?

Yes, there are other music and media swapping systems out there, they said.

But the key advantage of Napster is that it is very easy to use. "There is really no technical hurdle," they said.

They also added that because Napster has a large, well-established network, no other service can compete with the size of library that Napster users trade.

Webnoize estimated that over the weekend before the ruling, some 1.5 million users traded 250 million music files.

"Some hard-core Napster users will be looking for an alternative, but other systems do not have the ease of use and no where near the level of catalogue that Napster has," they said.

What does it mean for the recording industry?

The recording industry says that Napster has delayed the development of an online music marketplace, but Mr Bailey and Mr Rhoda said that Napster really showed the way.

Napster showed the way for the recording industry, Webnoize analysts say

Before Napster no one really knew if downloaded music was a viable distribution method.

"Really Napster has gone out there and shown the world that there is a huge potential market," they said, adding, "before Napster had shown up, there was really no idea on whether this would catch on with consumers."

What happens now to Napster's alliance with music giant Bertelsmann?

The ruling is obviously a setback. It greatly reduced Bertelsmann's leverage with other labels.

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."

But Bertelsmann was careful in how it structured its agreement with Napster, they said.

The German media conglomerate made sure that it was not directly involved with Napster so that if Napster goes down it would not threaten Bertelsmann.

Bertelsmann only agreed to drop its suit against Napster only if the online service could set up a legal file-sharing network.