Napster is more than just a service. It's a movement," said Gary Lacey. Lacey is an analyst with WebNoize Inc., the New York-based Web research organization that monitored Napster Inc. the weekend before a federal appeals court handed down its ruling against the music file sharing service.

The WebNoize findings are illuminating. An estimated 250 million songs were downloaded using Napster the weekend before the ruling, as users rushed to beat the decision by the U.S. Ninth Circuit Court of Appeals that would ultimately come on Feb. 12. That ruling found that Napster abets the infringement of copyrights held by major record labels.

On average, Lacey said, 1.5 million users were logged on to Napster at any one time during the weekend. During the month of January, nearly 3 billion songs were downloaded.

"Napster has given piracy to the masses," Lacey said.

As expected, the court's decision was cheered by the music industry. "This is a clear victory," said Recording Industry Association of America President Hilary Rosen in a statement.

Really?

While the court decision may lead to the shutdown or revamping of Napster and spawn an array of legal subscription-based offerings, attorneys, analysts and most significantly music fans agree that the decision will do nothing to stop piracy.

"Anybody can put up another Napster," said Loyola Marymount University freshman Brent Bartosch, who has 3,362 songs downloaded from Napster on his hard drive. "It's just going to be a matter of how passionate people are."

If the feeding frenzy at Napster during the weekend before the ruling was any indication, users are indeed passionate and not too inclined to switch to the legal alternatives.

In what seemed to be a desperate plea, businesses that offer copyright-friendly file sharing rushed off press releases promoting their services. Santa Monica- based Launch Media Inc., Hillsboro, Ore.-based Centerspan Communications Corp. and Fort Lauderdale, Fla.-based ByteAudio Inc. were among the first to sound off.

Those efforts and soon-to-be-available subscription services from Bertelsmann AG the Napster partner and parent company of the BMG labels and AOL Time Warner will probably do little stop the next Napsters from forming.

"So long as people think it's acceptable behavior to get something for free because no one is looking, then it will continue," said Robert Schwartz, an entertainment lawyer for O'Melveny & Myers. "You won't see well-organized businesses like Napster, but you will see a proliferation of others."

Indeed, "Napcats" proliferated at Occidental College, where school officials installed a software program called PacketShaper that makes Napster downloads unbearably slow.

"PacketShaper sucks," groused sophomore Ross Aikins. Students like Aikins hate PacketShaper because it makes Napster inefficient, but it has done nothing to stop the trading of music files on campus.

"The demand for free music is growing, and people will always find means to do it," Aikins said. "Napster may not be the way, but people will get their (music files) somehow."

Aikins, who has around 300 music files on his hard drive, said other services like Gnuetella, iMesh and Freenet have already filled the void. "They're not as reliable or as fast as Napster, but soon one of them or another will be," he said.

Those Napcats are especially frustrating to entertainment lawyers like Schwartz, who said the court's decision came way too late.

"I've been very dismayed at the lack of speed with which Ninth Circuit approached this decision," he said. "It has been four months since they argued, and in that time, people have built up huge archives of digital music. What are you going to do?"

Bounced Around

To Ricochet or not to Ricochet?

Ricochet, a provider of wireless equipment that "offers the full capabilities of a desktop experience," premiered in Los Angeles on Feb. 5, and its arrival has been met with much hype.

A press release issued by Ricochet's parent, Metricom Inc., quotes Mayor Riordan as saying, "Ricochet's arrival in Los Angeles recognizes the city's efforts to provide the best resources for our workforce and residents to stay on the move and still meet the demands of living on the Digital Coast."

But just three days later, San Jose-based Metricom announced disappointing subscription rates and said it would shut down in the second half of the year if it failed to get more financing.

Metricom said its total reserves dropped to $526 million from $792 million in the fourth quarter, as it spent big bucks on building networking infrastructure for Ricochet, which is now operating in 15 metro markets.

Metricom officials declined to comment on financing and referred all questions to a clarification statement, which it released on Feb. 9. "While we clearly need additional funding, we did not intend to give the impression that we are currently in the process of shutting down Ricochet. To the contrary, we believe strongly in Ricochet and its value in the marketplace," the statement said.

Metricom stock continued to plummet last week, falling to about $4 a share on Feb. 14, down from a 52-week high of $100.

"They have the capital to fund operations for the next six months," said Brent Bracelin, an analyst with Pacific Crest Securities. "In order to fund losses and additional expansion, they will need additional capital. The market is going to be tough."

Consumers haven't flocked to Ricochet, in part because of the modem's clunky size, which Metricom recently corrected, Bracelin said.

In the months ahead, Metricom could start to sell parts of its business off, possibly to larger wireless operators, he said.

Compaq Shifts Focus

The head of Compaq Computer Corp., Michael Capellas, told a German magazine last week that it is becoming increasingly difficult to earn money on PCs and, as a result, the Houston-based company is moving into developing new forms of Internet accessing systems. Meanwhile, in El Segundo, Compaq unveiled a prototype "Operations Center," which will serve as the only demonstration facility for Compaq's latest Internet access products, as a model for future centers to be built elsewhere and as the company's Western regional headquarters.

"We believe it's very important for Compaq and others that do business in L.A. to continue to communicate to rest of world that this is a hotbed of technology," said Leigh Morrison, the company's regional vice president. "Where else is there more content and more content providers?"

Staff reporter Hans Ibold can be reached at hibold@labusinessjournal.com.

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