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Napster CEO fights for life of music firm

Hank Barry talks with CNET News.com about what will become of Napster if the court refuses his appeal and about the future of swapping music on the Net.

       
    Just two months after taking the helm at Napster, Hank Barry is fighting for the company's life.

    Barry became Napster's interim CEO in May after the venture firm Hummer Winblad, where he is a partner, gave the company millions of dollars in funding despite its legal troubles.

    Napster was already facing a lawsuit by the Recording Industry Association of America (RIAA), which is accusing the company of infringing We respect the court's decision, but we don't agree with it.  We think it's wrong and we're going to appeal. on record labels' copyrights by allowing free distribution of copyrighted music over the Internet.

    Yesterday, U.S. District Court Judge Marilyn Hall Patel issued an injunction against the music-swapping company, effectively ordering Napster to cease all illegal transferring of music files.

    Barry and the company's attorneys filed an emergency motion to stay the injunction today. A ruling on that appeal is expected by tomorrow.

    Before joining the venture capital firm, Barry was a lawyer at Wilson Sonsini Goodrich & Rosati, specializing in technology and entertainment law. At the firm he was counsel to Walt Disney's online division, A&M Records and Liquid Audio, among other companies. He graduated from Stanford law school in 1983.

    Barry spoke with CNET News.com today about what will become of Napster if the court refuses his appeal and about the future of swapping music files on the Internet.

    CNET News.com: What's your reaction to the court ruling?
    Barry: We respect the court's decision, but we don't agree with it. We think it's wrong, and we're going to appeal.

    What will happen tomorrow night at midnight (PT) if the court refuses your appeal?
    We will comply with the court's order. We're looking at what it will take to do that right now.

    Will the site be completely shut down, or will it continue to operate in some capacity?
    There are 20 people in the company who are trying to answer that question We inted to follow this case through. We're here for the long haul. right now. I probably won't know that until 11:45 (p.m.) tomorrow. We will be working all night tonight. We worked all night last night. We have sleeping bags in our cubes.

    What will happen to Napster workers?
    I think employees will be laid off if the injunction goes into effect.

    Are you currently negotiating any kind of a settlement with the RIAA?
    We're not in any kind of discussions. We did have some discussions with some of the major record companies, but we have no such discussions right now.

    Are you prepared to take this case to the Supreme Court?
    We intend to follow this case through. We're here for the long haul. There are over 21 million members of the Napster community who think one-to-one file sharing is legal.

    What impact will the ruling have on your competitors, such as Scour.net and Freenet?
    I think that the reality here is that the judge's ruling...can and will be used as precedent against these other services.

    Even if Napster is shut down, will file-swapping capability ever be eliminated?
    The file-transfer activity is going on right now on Yahoo, on America Online, through email and MP3 transfers. There are mechanisms on Yahoo for anonymous file sharing right now, so there is selective enforcement going on. I think Napster was the easiest target.

    Court: Shut down Napster If you eventually lose the court case, what's the legacy of Napster?
    The good news about Napster is that millions of people got access to music they hadn't heard in a long time and discovered music they hadn't heard. We're all very proud to be a part of that. Napster shows that the Internet is designed for file sharing, and Napster has shown the way for creating applications that take advantage of the massive scale of the Internet.

    When your venture capital firm Hummer Winblad invested millions of dollars in Napster, did it foresee that a court injunction could force Napster out of business so soon?
    There are risks associated with every investment, and we tried to understand the risks here the best we could.