Napster in damages talks

Napster fhas been ordered to block files

Napster and the recording industry are due to meet on Friday to discuss the potential billions of dollars in damages the file-swapping service has to pay for copyright infringement.

The world's five largest record companies - Sony, Warner, BMG, EMI and Universal - successfully argued in court that the file-swapping service was a haven for piracy, costing the industry crucial revenue.

If the labels force Napster to go under, they will get nothing in the way of money

Leonard Rubin, copyright lawyer

The recording industry has already told Napster to block access to a list of 135,000 copyrighted songs.

A $1bn settlement offer from Napster to the record companies was turned down.

Stuggling

The service, which makes it easy for people to locate and trade songs stored as computer files in the MP3 format, is now struggling to keep afloat.

The two sides have refused to discuss the meeting but an industry source told Reuters news agency: "The $1bn proposal was not nearly appropriate and I don't see where Napster would get the money they will owe the labels anyway.

"I am not optimistic that a settlement is going to come out of that mediation because the damages are so huge."

While Napster does not store music files on its servers, it does contain the names of songs and where to find the music among its users' hard drives.

Compromise

But the record industry said this allowed more than 60 million fans to swap songs for free, robbing them of billions in profits as a result.

"If the labels force Napster to go under, they will get nothing in the way of money,'' said Leonard Rubin, a copyright lawyer.

A compromise settlement in which Napster reaches a licensing deal with each of the labels looks increasingly likely, according to many pundits in the industry.

Mr Rubin added: If they [the record labels] are going to reach a deal with anybody, they'd rather do it with an existing enterprise like Napster than have to deal with decentralized services like Gnutella."