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Napster effect on CD sales under debate Music distribution model still far from finalized
Gregory Elwell
The Daily Oklahoman
Page 2-C
Copyright 2001 The Oklahoman Publishing Company. All Rights Reserved.

STILLWATER - When the Recording Industry Association of America first brought its lawsuit against Napster Inc., the Internet song-swapping community with over 50 million members, it claimed 90 percent of all music downloaded via Napster's servers was pirated.

Whether record sales have been hurt by Napster is unknown. But Nicholas Economides, professor of economics at New York University's Stern School of Business, said any effects are negligible.

"The issue is debatable, because sales data cannot say for sure," Economides said, "But I don't think Napster has had a big effect on the sales of CDs."

Economides says whatever ill effects Napster has had on CD sales has been offset by the number of CDs it helped to sell.

"There are some people who get on Napster and download a song and never buy the album," Economides said, "But there are also people who download a song and like it enough that they go out and buy the CD. We cannot say for sure how big this effect is, either way."

On Monday, the 9th U.S. Circuit Court of Appeals in San Francisco ruled that Napster had "knowledge, both actual and constructive, of direct infringement" of copyrights and that it must halt that infringement once a lower court makes its case more specific.

Journalism professor Joey Senat, who teaches mass communication law at Oklahoma State University, said he's not surprised by the decision.

"They were clearly contributing to someone else's direct infringement," Senat said. "In short, they're helping other people steal copyrighted material."

Economides disagrees.

"The people who were directly violating the law were downloading," Economides said. "Napster was found liable, but it was really only secondary infringement."

After the lower court delivers its rewritten case, it is likely Napster will be shut down - at least temporarily.

In a statement to the media, Napster founder Shawn Fanning said the company has been "developing a Napster service that offers additional benefits to members of the community and, importantly, makes payments to artists."

Fanning said he wants the new service running within the year, but Economides said that model is still a ways into the future.

"Technology has made this new distribution model almost inevitable," Economides said. "They're still far away from implementing this model."

Even with a new pay-to-download format, some are skeptical about Napster's chances for survival.

Jeff Klein, electrical engineering senior at OSU said, "It'll work if they keep the cost low enough, but I probably wouldn't get a monthly subscription."

Economides said, "Once people get used to transferring music for free, it will not be easy to stop that. I don't think closing down Napster is the end of the peer-to-peer music trading," because new programs such as Gnutella and Freenet allow song-swapping to continue.

The new trading services have solved the problems that got Napster in trouble, because they have no central servers and thus no one to be held accountable.

"To close down Gnutella, you have to sue the individuals," Economides said. "And that is a whole new problem for record companies."


Napster: Even with a pay-to-download format, some are skeptical about the music-sharing service's chance of survival.

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