Music Industry Files Motion for Preliminary Injunction Against Napster

Study Finds Napster a Haven for Music Piracy and Hurts CD Sales

San Francisco, CA - June 12, 2000 - The Recording Industry Association of America (RIAA) and the National Music Publishers Association (NMPA) on behalf of their members, today filed a motion for preliminary injunction against MP3 file-swapping company, Napster. Accompanying declarations - including from Michael Robertson, CEO and Chairman of MP3.com, Jack Valenti, President & CEO of the Motion Picture Association of America and Chairman of The Copyright Assembly, legendary composer and songwriter Mike Stoller, Robert Kohn, Chairman, EMusic.com and E. Deborah Jay, Ph.D., president and CEO of Field Research Corp., describe widespread copyright infringement and industry harm as reasons supporting the requested injunction.

In addition to declarations from the record companies plaintiffs, others filing declarations include: Gregory J. Hessinger, Acting National Executive Director, AFTRA; Michael Fine, CEO, SoundScan, Inc; Dr. David J. Teece, Professor at Berkeley University; Dr. Ingram Olkin, Professor of Statistics and Education at Stanford University; Charles J. Sanders, National Music Publishers' Assn.; Charles Robbins, owner, Oliver's Records, Syracuse, NY; and Frank Creighton, Senior Vice President & Director of Anti-Piracy, RIAA.

The highly regarded Field Research Corporation conducted a study of 2,555 college students who were Internet users. In a report submitted by E. Deborah Jay, Ph.D., the study shows a direct correlation between Napster use and decreased CD sales.

"(Nearly half) of Napster users…described the nature of its impact on their music purchases in a way which either explicitly indicated or suggested that Napster displaces CD sales," said the Field Study. Moreover, according to the Study: "The more songs Napster users have downloaded, the more apt they are to say explicitly or suggest that Napster has reduced their music purchases."

According to statistical analyses filed with the Court, essentially every single Napster user sampled was engaged in some copyright infringement while using the Napster service and the overwhelming majority of songs actually copied and downloaded on Napster, over 87% (and likely much more) are infringing.

Filed in U.S. District Court, the Northern District of California - San Francisco Division, the plaintiffs argued that a preliminary injunction should issue because the music industry will likely succeed on their claims of contributory and vicarious copyright infringement and because Napster is causing irreparable harm to plaintiffs and the entire music industry.

In their motion, plaintiffs presented evidence demonstrating ongoing harm to CD sales, harm to the emerging legitimate market for downloading music, and - perhaps most important - a devaluing of music, as Napster teaches a generation of music consumers that artists do not deserve to be paid for their work, and their creative efforts are free for the taking.

Plaintiffs are asking the Court to enjoin Napster's facilitation of music piracy.

"This is not just about online versus offline," said Hilary Rosen, president and CEO of the RIAA. "Most in the online business community recognize that what Napster is doing threatens legitimate e-commerce models - and is legally and morally wrong."

The President and CEO of NMPA concurred. "The Napster model threatens the livelihood of the people who create music as well as the viability of legitimate Internet music businesses," said Edward Murphy. "We hope the Court will act to preserve the rights of songwriters and music publishers, who are being deprived of compensation for their works, and the Internet businesses that have acted responsibly in respecting the creators of music and taken licenses accordingly."

MP3.com, Inc. CEO and Chairman, Michael Robertson submitted a declaration in support of the motion stating that file sharing services like Napster do nothing to promote emerging artists and that MP3.com has not authorized Napster to distribute the music of MP3.com artists.

"In my view, Napster is not designed to promote or share the music of unknown or lesser known artists. The only way to find a song on Napster is to enter the name of the song and/or artist that the user wants to find," stated Robertson.

According to Bob Kohn, CEO of EMusic.com, "The entire purpose of the Napster service is clearly to facilitate the copying and mass distribution of MP3 music files without any regard for those who hold the copyrights to the recordings." And, according to Kohn, Emusic has not authorized or licensed Napster to distribute any of the more than 100,000 recordings available on EMusic.

"If the courts allow Napster and services like it to continue to facilitate massive copyright infringement, there is a grave risk that the public will begin to perceive and believe that they have a right to obtain copyrighted materials for free. This perception, of course, runs contrary to the entire complex system of copyright laws, which are designed to foster and encourage creativity and innovation by rewarding the creators," said Jack Valenti, president and CEO of the Motion Picture Association of America and chairman of The Copyright Assembly, through his declaration filed with the court.

The Copyright Assembly is a coalition representing the entire spectrum of American creative talent. It was established with the objective of preserving, protecting and defending the sanctity and concept of Copyright.

Legendary composer and songwriter Mike Stoller, whose songs span decades and include "Hound Dog," "Jail House Rock," "Stand by Me," "Love Potion #9," and "Fools Fall in Love," stated, "Composing and songwriting is not my hobby - it is my career. This distinction is important, and it is a distinction that is possible only because of the protections of the copyright laws," stated Stoller.

"Today I fear for the seventeen year old songwriter looking forward to a career in the music business. Napster.com and other companies like it are threatening not only to my retirement; they are jeopardizing the future of music itself. If Napster gets away with its thievery, it will turn that teenager's future livelihood into a mere hobby and in doing so, it will ensure that fewer and fewer talented individuals can afford to devote their efforts to expanding America's musical heritage," stated Stoller.

"I do not believe it is coincidental that the growth that we have found in CDR sales is most pronounced in the Newbury Comics stores located near college campuses," said Dreese, owner of New England-based comic store chain Newbury Comics.

"Customers…who used to buy pre-recorded CDs are now, instead, downloading the recording for free from Napster and burning them on to CDRs, which the consumers can buy for less than a dollar each."

Michael Fine, CEO of Soundscan, Inc. reported the findings of a SoundScan study showing Napster's adverse effect on album sales near colleges and universities:

"Data strongly suggests that on-line file sharing has resulted in a loss of album sales within the college markets…sales at stores near colleges and universities have declined significantly," said Fine through a statement issued to the court. "Music file sharing and Napster usage appear to have created a significant and detrimental impact on retail music sales."

The lawsuit, which was filed on December 7, 1999 by the RIAA on behalf of its member companies, charges Napster with contributory and vicarious copyright infringement. Plaintiffs in the lawsuit include: A&M Records, Inc.; Geffen Records, Inc.; Interscope Records; Sony Music Entertainment, Inc.; MCA Records, Inc.; Atlantic Recording Corporation; Island Records, Inc.; Motown Record Company, L.P.; Capitol Records, Inc.; La Face Records; BMG Music; Universal Records, Inc.; Elektra Entertainment Group Inc.; Arista Records, Inc.; Sire Records Group Inc.; Polygram Records, Inc.; Virgin Records America Inc.; and Warner Bros. Records Inc.

A complete list of public documents filed with the Court including the brief and supporting declarations can be found online at www.riaa.com under the link: "Napster Lawsuit Documents." Artists' comments regarding the Napster lawsuit and frequently asked questions can also be found.

The RIAA is a trade association whose members create, manufacture and/or distribute approximately 90 percent of all legitimate sound recordings produced and sold in the United States.

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The Recording Industry Association of America (RIAA) is the trade organization that supports and promotes the creative and financial vitality of the major music companies. Its members are the music labels that comprise the most vibrant record industry in the world. RIAA® members create, manufacture and/or distribute approximately 85% of all legitimate recorded music produced and sold in the United States.

In support of this mission, the RIAA works to protect the intellectual property and First Amendment rights of artists and music labels; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies. The RIAA® also certifies Gold®, Platinum®, Multi- Platinum™ and Diamond sales awards as well as Los Premios De Oro y Platino™, an award celebrating Latin music sales.