SAN FRANCISCO — Napster Inc., a fast-growing music-sharing Web site, can continue to permit people to trade copyright music online while it appeals a preliminary injunction that was set to take effect at midnight.
The Recording Industry Association of America and National Music Publishers' Association had urged the 9th U.S. Circuit Court of Appeals to let the court order go into effect, saying Napster's attorneys misleadingly claimed the injunction would force the site out of business.
The emergency decision gives Napster time to be heard on its appeal of the injunction and to explore a settlement with the music industry, said intellectual property attorney Mark Radcliffe.
As Web sites similar to Napster's proliferate, the music industry's case could set a precedent for creative businesses that rely on copyrights, such as book publishers and film companies. Some analysts say record companies have made a mistake by not forming partnerships with companies such as Napster, since other technologies will be more difficult to regulate.
"There are similar file-swapping services out there and Napster users are going to start migrating to them," said Shane Ham, a technology policy analyst at Progressive Policy Institute. "Napster-like services could spring up using Napster's legal problems as a road map."
Products such as Gnutella and FreeNet let users trade songs online and may be more difficult to stamp out because they are operated by networks of thousands of users, not a single company that can be hauled into court.
Napster, which offers software that allows Internet users to share music found on each other's hard drives, has said it will be forced to shut down under the order and lay off about 40 employees within days.
Traffic on the fast-growing Web site has soared 71 percent — 443,070 daily visitors on Tuesday, a day before U.S. District Judge Marilyn Patel issued the injunction, to 758,372 yesterday, according to Nielsen//NetRatings.
Attorneys for Napster said the Web site can't comply with Patel's order without shutting down the service because there's no way to distinguish copyright music from other recordings. Music industry lawyers called the argument "a red herring," saying there's no "meaningful technological impediment" that stops Napster from complying.
With Patel's order, "the music industry had a sweeping victory, but this only gives them breathing space," said Radcliffe, of Gray Cary Ware & Freidenrich in Palo Alto, California. "Unless they make more music available in a technologically simple way and cheap enough for people to buy it, the next round is going to be a more difficult challenge to them."