Courts grant Napster reprieve

Happy men: Shawn Fanning and Hank Barry after the ruling

A US federal appeals court has said that the internet file-swapping service Napster can stay on line for the time being.

A court in San Francisco had ordered Napster to end music trading service in all material covered by major record label copyrights by midnight on Friday local time - 0700 GMT on Saturday.

Napster is appealing to its users for help

Napster allows users to download software which allows them to search each others' hard drives for MP3 files.

The court ruling means that Napster can stay in business pending a further resolution of its case.

"The preliminary injunction issued by the district court in this matter is stayed pending further order of this court," the appeal judges said.

Next steps

18 August: Deadline for Napster to present written legal arguments

8 September: Deadline for RIAA rebuttal

12 September: Deadline for Napster reply

Hearing on first available court date after 12 September

Napster employees were reported to be jubiliant at the appeal judges' ruling.

"We are drinking champagne at the moment," Napster's lawyer Daniel Johnson said.

The company had asked for the emergency stay, arguing that the original court ruling would force it out of business.

Napster chief executive Hank Barry said he "strongly disagreed" with the original ruling, adding that evidence which showed his company had helped boost record sales had been ignored.

No discussions

Wednesday's ruling came after legal action from the Recording Industry Association of America (RIAA) - which represents the major US labels.

Napster has so far held no discussions with the record companies, Mr Barry said.

"Buycott" man: Napster chief executive Hank Barry

Napster's legal representative David Boies had told the court on Wednesday it would be difficult to comply without closing down altogether, as there was no easy way to separate legitimate and illegitmate use of its service.

The company's servers were close to capacity on Thursday as its 20 million users tried to beat the court order.

Other file-swapping sites, such as Gnutella and Freenet, also saw traffic increase. These are regarded as being much more difficult to police because, unlike Napster, these sites do not operate from a single server.

Stephen Bradley, of US technology consulting firm Gartner, said: "The record companies should be careful about what they ask for.

Napster claims 20 million users

"Their shortsighted desire to shut down Napster will make it nearly impossible to control the online trading of music. With Napster, there is experienced management and a 20-million-user captive audience.

"With Napster potentially shut down, the record companies have no one to negotiate with as distributed trading architectures like Gnutella have no management team, facilities or place of business."

'Buycott' call

While some Napster users are demanding boycotts of major label acts, Hank Barry is encouraging what he calls a "buycott".

"We're encouraging users to go out this weekend and buy their favourite albums and write to the labels, telling them Napster users are their most active customers and want to keep Napster alive," he said.

Napster is just over a year old, with the technology being developed by Shawn Fanning, a 19-year-old college student, in January 1999.

The company was founded five months later, and now employs 40 people at its headquarters in Redwood City, California.