Napster may be saved by filter

Napster founder Shawn Fanning fighting for survival

Napster will install a filtering system by this weekend to block the distribution of music that is protected by copyright, the online music-sharing service told a judge on Friday.

The RIAA wants Napster to vanish

The company's statement, which was seen as a final attempt to stave off forced closure, was met with scepticism from the music industry which wants to get rid of Napster.

Napster's attorney David Boies turned up at the 9th Circuit Court in San Francisco armed with powers that should convince District Judge Marilyn Hall that it will play by her rules.

Mr Boies said Napster employees had been working around the clock for the last two-and-a-half weeks to develop the filters.

Risk of closure remains

Without an effective filter, the risks that the court would force the service to close had been very high.

And the risks are still there. Napster has admitted that it has still not figured out exactly how the filtering system will work.

"We are inserting a step between the uplink and the viewing of the index that will block out specific file names," Boies said. "The problem is that this will adversely affect performance of the system".

"Sometime this week, we will have completed the software implementation so that these file names will be blocked".

Injunction expected

The judge had been expected to issue an injunction that would have prevented the popular online service from using copyrighted songs.

These are estimated to represent about 70% of the content swapped using Napster's popular software.

Without an effective filter that could determine when copyrighted music is sent through Napster's computers, the service may still be forced to close. The courts had already issued an injunction to that effect last July.

But two days later, this ruling was postponed by a federal appeals court, even though it had broadly agreed with the judge's original ruling.

The appeals court had asked Judge Patel to rewrite the order in a way that would allow Napster to survive if it kept pirates off its network.

A race against time

In February, a panel of three appeal judges ruled that an injunction was not only warranted but required.

This ruling was seen as a partial victory for the music industry.

Following Friday's court hearing, the judge said: "It is left to me to fashion an injunction that makes sense based on what I have heard."

Industry observers were not expecting an immediate ruling following the court hearing and the judge was unable to shed any light on when a decision might be announced.

Copyright infringements

Napster had been pleading for more time to develop a technology that could sift through the music files that were being exchanged by more than 50 million individual users, thereby stopping the pirates.

Record companies allege that Napster's activities represent an infringement of copyright, which is costing them billions of dollars in royalties.

The landmark court case is expected to set standards for copyright in cyberspace.

As a consequence, it will affect how music, books, movies and other entertainment will be distributed via the internet.

Cash offer rejected

In a previous attempt to avert an injunction, last week Napster offered the five major record companies a $1bn deal to settle the case.

The proposal was rejected and ahead of Friday's court hearing the president of the Recording Industry Association of America (RIAA) seemed confident of a victory.

"I think it's pretty well known that Napster is not ready," RIAA president Hilary Rosen said at the time.

"They are probably not ready to take all of our track names and deal with the system and I'm hoping the court won't have patience with that because this has been coming for almost a year".

And after the court hearing had started, RIAA attorney Russ Frackman was dismissive of Napster's latest struggle to stay afloat.

"We don't believe there should be a negotiation at this late stage over format," he said.

New model

Hank Barry, Napster's chief executive, said the company was continuing work on a subscription-based service, which could be launched in a few months' time.

The company is working on the new model with media giant Bertelsmann, parent company of the BMG music label.

Bertelsmann is the only one of the five major record companies to have reached a deal with Napster and dropped the lawsuit against the online firm.

It has promised to make its catalogue available if Napster switches to a membership-only service.

Meanwhile, Napster has petitioned the appeals court to review its earlier decision, requesting a full hearing with the 25 US Court of Appeals judges present. They have to persuade at least half of the judges that the case warrants review.

A decision is not expected for several weeks, but analysts say Napster could ask for a stay on the injunction until the appeals request is decided.