Napster fears closure

Napster has warned that yesterday's court ruling that it must stop its users from swapping copyrighted music files would lead to the closure of the site and has vowed to continue fighting its wider legal battles with the music industry.

Yesterday, a US court of appeal ruled that Napster would be liable for copyright infringement if it continued to allow its millions of users to trade songs that are protected by copyright. But in a message to its members, Napster said its fight against several copyright infringement lawsuits waged by the big five recording companies was not yet over.

"We still have a lot of work to do, and we need your valuable help," reads a posting on its site. It urges its users to voice their feelings and write to the record companies in support of Napster.

In a statement, Napster chief executive, Hank Barry, said: "The court ruled on the basis of what it recognised was an incomplete record before it. While we respect the court's decision, we believe that Napster users are not copyright infringers and we will pursue every legal avenue to keep Napster operating."

But some analysts believe the judgement is the beginning of the end for Napster. PJ McNealy, an analyst at researcher Gartner, said: "Napster got nailed, plain and simple. This decision is a major step towards shutting down the service as it currently stands."

He warned that the decision would drive swapping of illegal music deeper underground.

Meanwhile, German entertainment giant Bertelsmann, which agreed to withdraw its lawsuit once Napster implements a fee-based subscription model, said it would continue to work with the music file download company to reach a "mutually satisfactory solution".

Andreas Schmidt, president and chief executive of Bertelsmann's ecommerce group, said: "File sharing is here to stay, and we will continue working to build a membership-based Napster service that will be supported by the music industry."

But McNealy does not believe that the support of Bertelsmann is enough. He added: "Napster expects to have a new service ready this summer, but that may not be too compelling with just BMG [Bertlesmann's music label] content on it."

The judgement has also riled one US consumer electronics industry association, which accused the appeals court of "ignoring the basic principles of copyright infringement".

The Consumer Electronics Association (CEA), which represents manufacturers of audio and video systems, liken the court decision to a similar one made in 1981, which ruled that video cassette recorders (VCRs) were illegal. That decision was later overturned by the Supreme Court.

CEA president and chief executive, Gary Shapiro, said: "If that decision had stood, we would have no VCR or movie rental to the detriment of Hollywood and consumers. We can only wonder if [the Napster ruling would mean that]technology and consumer access will be limited in the future."