Watching the Napster saga has been like watching the recent television movie Attila. In each, hordes of barbarians loot civilization, all the while arguing that they are the good guys. But now the Ninth Circuit has acted, upholding the injunction against Napster and pushing the barbarians back beyond the frontier, at least for a time. (See http://www.ce9.uscourts.gov/.)

A basic distinction must be made between Napster the business and Napster the file-transfer technology. The Ninth Circuit enjoined only the business, and that only to the extent that it fails to police its site and remove access to copyrighted material when asked to do so. The technology remains untouched; anyone is free to use it in ways that do not involve copyright infringement. And Napster the business remains free to provide swapping services when copyright holders fail to object or when works are in the public domain. The court also tossed out the silly contention that swapping millions of files among strangers is somehow fair use, as if it were the equivalent of a few friends sharing a track from the latest release.

All of these rulings are absolutely correct, and as a legal matter the case was a slam-dunk for the plaintiffs, especially considering internal Napster memos gloating over how much copyrighted material the company was making available.

More importantly, the decision is a victory for morality, good sense, and the welfare of consumers. The battle over Napster has always been a PR and moral fight as much as a legal one, as the company’s supporters deploy a series of arguments: “CDs cost too much.” “Record companies rip off artists.” “We are fans; we made the groups famous, so we have a right to their music.” “The marginal cost of producing a CD is almost zero, and economists say that price should equal marginal cost, so CDs should be priced at zero.” “The companies have suppressed Internet distribution to protect their current system. If they made CDs easily available on the Web, people would pay voluntarily.” “Artists can give away CDs and make money on concerts.”

These arguments can make superficially appealing sound bites, but they evaporate on analysis. Sure, there is a backlog of existing music that can be looted without affecting the supply, just as the Huns could sack cities of existing wealth. But if consumers want more music produced in the future, then methods must exist for paying artists to create it and businesses to distribute it. Any workable system requires the existence of reasonable, enforceable intellectual property rights, sophisticated contracts, and well-functioning markets. (See, “Do You Really Want to be a Product?” Intellectual Capital, Aug. 8, 2000, www.speakout.com/Content/ICArticle/2899/.) The Dark Ages are not an encouraging model for the music business. Or any other.

(For more CEI works on intellectual property, go to the intellectual property section on CEI’s web site.)