Consumers strike back, sue RIAA By Liane Cassavoy, PC World.com September 12, 2003 9:35 am ET

After taking its antipiracy campaign to court, the music industry is finding itself on the receiving end of a lawsuit that challenges its purported amnesty program as a fraudulent business practice.

The Recording Industry Association of America Inc. announced its Clean Slate program Monday, when it filed suit against 261 people for copyright infringement as a result of excessive use of peer-to-peer services. The Clean Slate program purports to offer amnesty to repentant file-swappers who promise to stop using peer-to-peer services to illegally download copyrighted works and to destroy any copies of downloaded audio files.

To qualify for the amnesty program, applicants must fill out a sworn affidavit that requires a full name, address, telephone number and e-mail address, have it notarized, and send it to the RIAA. In turn, the RIAA agrees not to “support or assist in any copyright infringement suits based on past conduct,” according to the organization.

But the offer is neither clean nor a sweep, says Ira Rothken, the Marin County attorney who filed the consumer lawsuit Tuesday in California Superior Court.

Not the RIAA’s Call?

The RIAA claims the amnesty program “would provide people with a clean slate, but after a further reading of the legal documents, it became apparent that this Clean Slate program didn’t provide any such thing,” Rothken says.

“The legal document provides no release of claims, no promise not to sue you. It offers no promise to actually clean the slate by destroying the data that these people provide,” he adds. “All it says is that the RIAA simply will not cooperate in any lawsuit brought against you. That on its face is a deceptive business practice.”

And the offer is deceptive because the RIAA does not own the copyrights in question, Rothken says. The music labels — RIAA members — are the plaintiffs, he says. But because the RIAA is leading the charge, people think the RIAA has the power to promise not to sue them, when it doesn’t, Rothken says.

“Any of the RIAA’s members could file suit against these individuals who have participated in the Clean Slate program, and subpoena the information they need from the RIAA about this person’s guilt,” Rothken says. “So, in the end, the person who supplies all this information to the Clean Slate program will have a dirtier slate than they would have if they never participated.”

RIAA Stands Firm

The RIAA disputes this interpretation, saying the affidavit form, which is available on MusicUnited, is not deceptive.

“Read the form, it’s pretty clear what’s being offered and who’s offering it,” says Jonathan Lamy, an RIAA spokesperson.

“Apparently no good deed goes unpunished,” Lamy adds of the criticism. “It’s also unfortunate and ironic that some lawyer would try to prevent others from getting the assurance that they want, that they won’t be sued.”

Rothken’s law firm is not the first organization to warn people about potential danger in the RIAA’s amnesty program. Last week, before the RIAA formally announced its plan, the digital rights group Electronic Frontier Foundation warned users against accepting the RIAA’s amnesty offer.

“Stepping into the spotlight to admit your guilt is probably not a sensible course for most people sharing music files online, especially since the RIAA doesn’t control many potential sources of lawsuits,” Wendy Seltzer, EFF staff attorney, said in a statement last week.

Murky Music

Cary Sherman, the RIAA’s president, addressed these concerns Monday when announcing the copyright crackdown and amnesty deal. He rebutted suggestions that participating in the Clean Slate program could prove costly.

“We have pledged to keep this information solely for our use, for our records of people who should not be sued,” Sherman said. He said the RIAA would not release the data to copyright holders who might intend to sue.

Unconvinced, Rothken went a step further than simply warning consumers about the program’s potential pitfalls and filed a complaint under the California Business and Professions Code. His lawsuit asks the court to end the RIAA’s program as “unlawful, unfair, and deceptive.” The RIAA’s “guarantee not to sue file sharers” is designed to mislead the public into incriminating themselves by giving the RIAA “admissions of wrong-doing.”

The RIAA’s intentions remain unclear, says Deborah Peckham, a partner in the Patent and Intellectual Property Practice Group at Testa, Hurwitz & Thibeault in Boston.

“It’s really too soon to say whether these people are putting themselves at risk by participating in this program, but the allegations made in (Rothken’s lawsuit) are not without some merit,” Peckham says. “In essence, what the RIAA is doing apparently is collecting these affidavits and storing the information somewhere. The concern is that that information is going to be spread among the music companies, and there’s nothing in the agreement that would bar those companies from suing the users.”

Peckham has reviewed some of the suits filed Monday, and confirms that the RIAA is not named as plaintiff in any she has seen.

California’s Standards

Rothken’s complaint cites California law that says fraud may exist not only if a consumer is injured by the business practice in question, but if there is the potential for injury.

“The only standard is that the business practice in question is likely to deceive reasonable members of the general public,” Rothken says.

This law also allows one citizen to be named as a plaintiff to represent the general population. In this lawsuit, that citizen is Eric Parke, a former paralegal who has not used peer-to-peer networks to download music illegally, according to Rothken.

“In California, our law allows people who are unaffected by the business practice in question, people who would not have traditional standing to sue, to serve as the plaintiff,” he says. One reason for this, Rothken says, is that people who stand up against large organizations could be retaliated against, and may be unwilling to come forward.

The lawsuit now goes to the California Superior Court, but Rothken cannot guess when the case might be heard. He does expect the court will insist that the RIAA make good any amnesty offer.

“The court will likely tell the RIAA that if they’re going to promise amnesty and a clean slate, then you have to do something that delivers on that promise; for example, you have to offer a release of all claims. Or, if you can’t do that, you have to stop the promise, don’t call it amnesty,” Rothken says. “It’s likely the RIAA will have to admit that they don’t have the authority to release all claims, because they don’t have the power to stop these lawsuits, because they don’t own the copyrights.”

Give people choice and freedom and they’ll pay. Try to sue your own frickin’ customers into oblivion and we’ll see you in bankruptcy.

-Ian.

—— http://story.news.yahoo.com/news?tmpl=story2&u=/washpost/20030909/ tc_washpost/a47297_2003sep9&e=1 RIAA vs. the People Tue Sep 9,11:06 AM ET

By Cynthia L. Webb, washingtonpost.com Staff Writer

The Recording Industry Association of America ( news -web sites )made good on its promise to prosecute Americans who engage in the illegal downloading and trading of pirated music, filing 261 copyright violation suits yesterday.

“Legal actions have been taken on a sporadic basis against operators of pirate servers or sites, but ordinary computer users have never before been at serious risk of liability for widespread behavior. The RIAA said that’s the point it’s underlining with the unprecedented legal action,” CNET’s News.com reported.

But in an editorial today, the San Jose Mercury News said the RIAA’s legal campaign is bad policy: “Suing your customers, as a long-term strategy, is dumb — even if they bring misfortune upon themselves. … The suits are the unfortunate, but predictable response of an industry that failed to see the Internet until it stared it in the face. Since Napster ( news -web sites ) first appeared four years ago and declared the death of the compact disc, music CD sales have fallen more than 25 percent. A generation of music fans don’t think twice about copyrights, which they associate with overpriced CDs and parasitic studio execs.”

According to the Mercury News editorial board, the music labels “won’t win back many of those customers until they make their full catalog of tunes easily accessible over the Internet, in formats that people want, at prices they’re willing to pay. That’s starting to happen — Apple Computer ‘s iTunes Music Store and BuyMusic.com are offering songs from 49 cents to $1 — but the offerings are limited. The music studios are still dragging their feet. For now, the big labels hope to scare people straight, particularly parents, since copyright owners can sue children for theft.”

The New York Times pointed out an even larger implication of the RIAA suits: “With the club of lawsuits and the olive branch of an amnesty program, the music industry is waging a campaign against online piracy that relies on both public relations and economics to attack the idea that everything in cyberspace can be free,” the article said. “That will not be easy. The Internet sprang from a research culture where information of all kinds was freely shared. That mentality still resonates with the millions of Internet users who routinely download music onto their computers. But the emphatic message of the music industry’s two-step program announced yesterday is that the days of plucking copyrighted songs off the Internet without paying for them are numbered.”

An Escalating Fight Against Ordinary People

Thousands more lawsuits against fileswappers are expected in the coming months as the RIAA looks to make examples of the worst digital pirates: People accused of downloading and sharing on average more than 1,000 illegally downloaded songs, thanks to Gnutella ( news -web sites ),Kazaa ,Grokster and other popular file-trading services.

The Washington Post said the “legal offensive aims to stem the tide of online song sharing launched by Napster in the late 1990s, and it is likely to strike fear into the hearts of parents who have not closely monitored their teenagers’ computer habits. That’s because the lawsuits were filed against the holders of Internet service accounts, regardless of who in the household was responsible for swapping the songs.”

The Los Angeles Times said the “cases — the first of thousands the labels expect to file in federal courts — mark a turning point in the music industry’s four-year battle against rampant piracy on the Internet. For the first time, the recording industry is training its considerable legal firepower on individuals, not the companies profiting from the public’s hunger for free music,” The Los Angeles Times said. “One quirk in the process, though, is that the defendants named aren’t necessarily the people using file-sharing networks. That’s because the Recording Industry Assn. of America’s investigation identified only the people whose Internet access accounts were being used to share files. They might be the parents, roommates or spouses of the alleged pirates.”

The RIAA suits hit the young and old and stretched across economic lines too. Among those sued is the Bassett family from Northern California. ” Scott Bassett said neither he nor his wife used the family PC in Redwood City, Calif., for music, but their teenagers and dozens of their friends do. Had he known what was going on, he said, ‘I would have pulled the plug,'” The Los Angeles Times reported, quoting the former junkyard operator who, like other targets of the suits, was confused about what to do. “Do I really need to hire a lawyer? Can I just call them up and say I’m sorry and give them back all the music that was downloaded? I’m just a little guy,” Bassett told the paper.

The Bassetts were darlings of the media yesterday, appearing in a number of articles, perhaps since they illustrated so nicely the ironic twist of the suits, which can target people who own the ISP accounts, not necessarily the file-swappers themselves. “I can’t believe this,” Vonnie Bassett , mother of a 17-year-old file-swapper, told The San Jose Mercury News. “To think I might actually have to pay money to these people. I think it’s the stupidest thing that the recording industry would do this.”

Lisa Schamis , a 26-year-old New Yorker, “said her Internet provider warned her two months ago that record industry lawyers had asked for her name and address, but she said she had no idea she might be sued. She acknowledged downloading ‘lots’ of music over file-sharing networks,” the Atlanta Journal-Constitution reported. “This is ridiculous,” Schamis said. “People like me who did this, I didn’t understand it was illegal.” Neither did Nancy Davis , a Sanol, Calif. schoolbus driver. “From what I understood — and I’m not the most computer-savvy person in the world — I thought it was becoming legal,” Davis told The San Francisco Chronicle. “I’m completely shocked by the whole thing,” Heather McGough , a single mom of two children from Santa Clarita, Calif., told The Los Angeles Times. She “figured that the music-sharing services that survived after Napster was shut down must be legal. She said she let a friend install a program for the Kazaa file-sharing network on her computer so that she could listen to music — songs she already owned on CDs — while she worked.”

Paying the Piper

So what’s in store for those snared in the RIAA lawsuits? “The RIAA suits seek an injunction to stop the defendants’ file sharing, as well as damages and court costs. Copyright law allows for damages of up to $150,000 per infringement — in other words, per swapped song,” The Washington Post noted. More from The Boston Globe: “Accusing the defendants of copyright infringement, the music association is requesting statutory damages of $750 to $150,000 for each song, bringing the potential liability of some file-sharers into the millions of dollars.”

“Individuals, I’m sure no matter who they are, simply don’t have that kind of money,” Atlanta attorney Doug Isenberg , who specializes in Internet law, told The Atlanta Journal-Constitution. “And there’s no way possible the RIAA can sue even a meaningful number of people, because there are tens of millions of potential defendants.”

Perhaps some good news for those being sued: The Philadelphia Inquirer reported that the “RIAA has been settling for less: Yesterday, it announced $3,000 agreements with fewer than 10 people whose Internet service providers had received subpoenas.”

RIAA President Cary Sherman told The Los Angeles Times “he would welcome cases going to trial because it would help establish for the public that file sharing is illegal. The proceeds from any trials or settlements will be kept by the RIAA to cover the cost of its anti-piracy campaigns, he said, rather than being used to compensate labels and artists. Several lawyers warned that the RIAA’s amnesty offer may be a bad deal. Those who apply for amnesty from the RIAA must confess their past transgressions, but that won’t protect them from being pursued by music publishers, independent labels or even federal prosecutors.” The RIAA is offering amnesty to those who admitted to file-swapping, erase their digital libraries of songs and sign a notarized promise not to do it again.

Criticism From the Usual Suspects

Critics of the RIAA’s move were vocal in their objections to yesterday’s developments. The Electronic Frontier Foundation clearly hates the idea of the lawsuits. “Does anyone think that suing 60 million American file-sharers is going to motivate them to buy more CDs?,” EFF Staff Attorney Wendy Seltzer asked in a statement . “File sharing networks represent the greatest library of music in history, and music fans would be happy to pay for access to it, if only the recording industry would let them.”

Bill Evans , founder of Boycott-RIAA.com , told The Baltimore Sun that the lawsuits amount to a witch hunt. “They are trying to intimidate people and to stop file-sharing because they can’t control it,” Evans said. “If that’s the case, we believe they should take over a portion of the market and make it more affordable to people.”

Elan Oren , chief executive of file-sharing site iMesh , told The New York Times that “rather than filing huge lawsuits, record labels should work with file-sharing services to devise a method of compensation in exchange for legally distributing their music over the peer-to-peer networks. But record companies say creating a compensation system for file sharing — for instance, imposing a tax that could be redistributed to copyright holders — would be extremely difficult.”

“Michael McGuire , research director at the GartnerG2 research firm, said the threat of legal action needs to be just one part of a more widespread effort by the recording industry to deal with illegal Internet music swapping,” The Chicago Tribune said. “Are hard-core traders going to see the light and see the error of their ways?” McGuire told the paper. “I don’t think so.”

RIAA Strategy Paying Off

The music industry’s tactics, while controversial, have made a dent to some file-swapping. “Still, there is little agreement about whether the industry’s tactics are having much impact on music piracy. The recording industry has cited data from research firm NPD Group that estimated the number of households downloading music from the Internet declined 28% to 10.4 million in June from 14.5 million in April, around the time music companies began publicizing a campaign to target individual file sharers. Music companies have also been trying to wean music fans off file-sharing programs by licensing their songs to commercial music sites like Apple Computer Inc.’s Music Store,” The Wall Street Journal reported. “But services like Morpheus, LimeWire and Grokster all report that usage of their services has grown, especially as students have returned from vacation.”

But the music industry has a long way to go before it stamps out piracy. “From the rise of Napster until today, tens of millions of people have started trading songs, movies and software online through services such as Kazaa with little thought for the legality of their actions,” News.com noted. “Even as the threat of Monday’s lawsuits loomed, more than 2.8 million copies of the Kazaa software were downloaded last week, according to Download.com , a software aggregation site operated by CNET News.com publisher CNET Networks . Indeed, a recent study by the Pew Internet and American Life Project found that 67 percent of people downloading music said they did not care whether the music was copyrighted or not.”

The Future of E-Music?

Apple’s iTunes is being held up as a successful, legal alternative to secret file-swapping. The pay-for-play service has been a hit with music fans and everyone from Sony to Microsoft is looking for a comparable match to compete with the service. Apple’s service has sold 10 million songs since its launch in May. “Legally selling 10 million songs online in just four months is a historic milestone for the music industry, musicians and music lovers everywhere,” Apple head Steve Jobs ( news -web sites )said, according to BBC News Online, which noted (how ironic, in light of the complications of the RIAA’s legal suits) that the 10 millionth song sold on the service was “Complicated,” by Avril Lavigne .

Thank god she’s off the streets. I feel safer now.

-Ian.

——- http://story.news.yahoo.com/news?tmpl=story&cidR8&ncidR8&e=1&u=/ap/ 20030909/ap_on_en_mu/downloading_music

Girl, 12, Settles Piracy Suit for $2,000

36 minutes ago By TED BRIDIS, AP Technology Writer

WASHINGTON – A 12-year-old girl in New York who was among the first to be sued by the record industry for sharing music over the Internet is off the hook after her mother agreed Tuesday to pay $2,000 to settle the lawsuit, apologizing and admitting that her daughter’s actions violated U.S. copyright laws.

The hurried settlement involving Brianna LaHara, an honors student, was the first announced one day after the Recording Industry Association of America ( news -web sites ) filed 261 such lawsuits across the country. Lawyers for the RIAA said Brianna’s mother, Sylvia Torres, contacted them early Tuesday to negotiate.

“We understand now that file-sharing the music was illegal,” Torres said in a statement distributed by the recording industry. “You can be sure Brianna won’t be doing it anymore.”

Brianna added: “I am sorry for what I have done. I love music and don’t want to hurt the artists I love.”

The case against Brianna was a potential minefield for the music industry from a public relations standpoint. The family lives in a city housing project on New York’s Upper West Side, and they said they mistakenly believed they were entitled to download music over the Internet because they had paid $29.99 for software that gives them access to online file-sharing services.

Even in the hours before the settlement was announced, Brianna was emerging as an example of what critics said was overzealous enforcement by the powerful music industry.

The top lawyer for Verizon Communications Inc. charged earlier Tuesday during a Senate hearing that music lawyers had resorted to a “campaign against 12-year-old girls” rather than trying to help consumers turn to legal sources for songs online. Verizon’s Internet subsidiary is engaged in a protracted legal fight against the RIAA over copyright subpoenas sent Verizon customers.

Sen. Dick Durbin, D-Ill., also alluded to Brianna’s case.

“Are you headed to junior high schools to round up the usual suspects?” Durbin asked RIAA President Cary Sherman during a Senate Judiciary hearing.

Durbin said he appreciated the piracy threat to the recording industry, but added, “I think you have a tough public relations campaign to go after the offenders without appearing heavy-handed in the process.”

Sherman responded that most people don’t shoplift because they fear they’ll be arrested.

“We’re trying to let people know they may get caught, therefore they should not engage in this behavior,” Sherman said. “Yes, there are going to be some kids caught in this, but you’d be surprised at how many adults are engaged in this activity.”

-Ian.

———-

Music Industry Ad Snipes at Downloaders 24 minutes ago Add Technology – Reuters Internet Report to My Yahoo!

By Michele Gershberg

NEW YORK (Reuters) – Music industry groups turned up the volume in their fight against song-swapping over the Internet on Thursday, warning Americans in a full-page newspaper advertisement that they could face legal action.

The advertisement is part of an aggressive initiative announced Wednesday by the Recording Industry Association of America (news – web sites), which said it plans to sue hundreds of individuals who illegally distribute copyrighted songs over the Internet.

The legal plans marked a sharp escalation in the battle against Internet piracy that until now had concentrated on shutting down the “peer-to-peer” services used for swapping.

Some experts said the group’s latest tactic will only alienate the general public.

“Next time you or your kids ‘share’ music on the Internet, you may also want to download a list of attorneys,” a bold print headline said in the advertisement in the New York Times, signed by 13 different music trade groups and associations.

The RIAA was a signatory to the Times ad, which argued that music can be bought online legally without harm to musicians.

“Stealing music over the Internet is no different than shoplifting CDs out of a record store,” the ad said. “It’s also a very public activity — meaning that offenders can easily be identified.”

More than 2.6 billion songs, movies and other files are copied over computer networks every month, according to industry estimates. Executives believe such trading has led to a 14 percent slide in revenues since pioneering service Napster (news – web sites) opened in 1999.

The RIAA, whose roster includes the five top record labels, has shut down Napster and several similar networks but failed to stem the tide of Internet sharing. It hopes the lawsuits and advertising might deter people in their own homes.

“We hope that parents will pay attention to what their kids are doing … that corporations will pay attention to what their employees are doing,” RIAA President Cary Sherman told Reuters.

Adam Cohen, a partner in the litigation department of Weil, Gotshal & Manges LLP, said the music industry in its battle shows “a lack of concern with alienating the consumer … It’s hard to imagine that this would really spur people to buy more records.”

Cohen, who has represented online radio and Webcasting services on copyright issues, noted the Napster case ended with a bankruptcy but left open the legal debate on targeting individuals who copy music for non-commercial purposes.

RIAA members include AOL Time Warner Inc.’s (NYSE:AOL – news) Warner Music; Vivendi Universal’s (NYSE:V – news) Universal Music Group; Sony Corp (news – web sites).’s (6758.T) Sony Music; Bertelsmann AG (news – web sites)’s (BERT.UL) BMG and EMI Group Plc (news – web sites) (EMI.L).

Bertelsmann is also the subject of lawsuits from EMI, Universal Music and music publishers for allegedly perpetuating online piracy with a previous investment in Napster.

A day later, in case you live in a #^@$ing cave, Napster got burned at the stake by the San Francisco US Circuit Court, which upheld the earlier ruling that Napster IS in fact liable for the actions of their users. Sploosh! The billion dollar lawsuit will proceed.

This is the most comprehensive article I’ve found in the last couple of days.

Is it already a cliché to assert that Napster is really just the lightning rod for Big Music’s fear of the Internet?

-Ian.

—–

Tuesday February 13 6:31 PM ET Napster Prepares for the After-Life

By Sue Zeidler

LOS ANGELES (Reuters) – It could be curtains for Napster unless it can forge a duet with the recording companies who have been trying to get it thrown off the air.

The wildly popular song-swapping service, which has been told by an appeals court to stop its millions of users from trading copyrighted music, must either find the cash to pay mounting bills to keep a legal fight going or reach settlements with major record labels if it wants to survive.

“The challenge for them is how to go legit and still keep their business,” said Bill Burnham, managing director of Softbank Venture Capital.

Monday, the 9th U.S. Circuit Court of Appeals supported a District Court ruling that would effectively shut Napster down but asked the lower court to modify its original ruling. An injunction could be issued in days or weeks.

As millions of songs were being downloaded ahead of the injunction, Napster vowed to keep up the fight in the courts and in Congress.

Napster’s Chief Executive Officer Hank Barry said the company has the financial resources to keep going and planned to continue discussions with record companies.

The longer Napster is shut down, however, the greater risk it faces of losing fan and brand loyalty, said Aram Sinnreich, analyst with Jupiter Media Metrix.

“This ruling will accelerate settlement talks with other major labels simply because Napster doesn’t want to go for too long time with the service down,” Sinnreich said. He said Napster was likely to sweeten terms to recording companies.

COULD NAPSTER SELL OUT?

Many Napster users, which total more than 50 million, are already looking at alternative file-swapping sites to get their songs from once Napster is shut down.

Research firm Webnoize Tuesday said an estimated nearly 91 million songs were downloaded using Napster Monday following the ruling, compared with 130 million Sunday in anticipation of the appeal court’s decision.

Analysts, such as Phil Leigh, of Raymond James and Associates believe that Napster — which to date has only received about $17 million in venture capital funding and faces potentially billions in liability costs — may run out of money.

Leigh compared Napster’s predicament to that of Scour.com, another file-sharing community that was sued for copyright infringement and which filed for bankruptcy last October.

Scour’s assets, including its name and membership lists were ultimately sold in December for about $9 million in cash and stock to CenterSpan Communications (NasdaqNM:CSCC – news), which plans to relaunch the Web site as a subscription service.

“If Napster’s active membership drops to a fraction of its current total, it may seek to sell its assets, which might include the name and the membership list,” Leigh said.

Under a deal announced in October, German media giant Bertelsmann AG (BTGGga.D) agreed to loan Napster an estimated $50 million to keep the site operating and help transform the service into a viable, fee-charging subscription service.

Leigh said Bertelsmann might be a logical buyer of Napster’s assets, which could then relaunch the service with BMG content.

“Bertelsmann is also attempting to purchase EMI Group Plc’s EMI Music Plc (EMI.L) and if it can get access to the EMI catalog, the reborn Napster under BMG ownership might have enough content to make an interesting subscription service,” he said.

Some Believe Settlements Now Likely

The recording industry knows that in order for any music subscription to work well, it needs offerings from all the labels. Now that the record industry has won the appeals court ruling, settlement talks may speed up between the labels and the service that rocked the music world.

“No other major record companies have struck a deal with Napster since Bertelsmann and that could be because the business model wasn’t adequate from their perspective and also because they wanted a strong legal opinion,” said Cary Sherman, general counsel for the Recording Industry Association of America (RIAA), which represented the labels against Napster.

“Now that they have gotten a ruling they may be more receptive to negotiations that lead to a viable business model for this kind of service,” Sherman said.

Sinnreich said the heat is on Napster to relaunch a subscription service.

“Napster can offer the labels higher royalty rates, bigger equity stakes. They’ll bend even further backwards,” he said. ”I wouldn’t be surprised if the next company on board was either EMI or (AOL Time Warner’s (NYSE:AOL – news)) Warner Music.”

He cited EMI because it is in merger talks with Napster’s partner, Bertelsmann, and Warner because its new parent, AOL, is planning to launch its own subscription service.

“I think a Warner deal with Napster is very possible. It would make sense for Napster/Bertelsmann to have a reciprocal deal with Warner, which could then use Bertelsmann content on the AOL service,” he said.

Both EMI and Warner Music declined to comment on settlement discussions with Napster.

“EMI is open-minded and is prepared to do business with people who come up with viable business models that help us achieve the widest distribution of our music to consumers,” said Amanda Conroy, a spokeswoman for EMI.

But many music industry executives remained skeptical about settlements with Napster and said that efforts to launch other subscription services would likely garner more attention.

“There are many impediments to Napster relaunching a service. They’ll have to pay for past infringements, which would be part of a settlement, and raises the question of whether or not the business would be sustainable,” one record executive said.