1. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval

2.  History  Additional Partnerships  Litigation & Ruling  Intellectual Property Rights  A House Divided  Issues & Strategies – Bertelsmann & Napster  Recommendations  Questions & Answers Agenda

3. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Founded in May 1999 by 19 year old Shawn Fanning.  Pioneered peer-to-peer file sharing creating one of the fastest growing and most frequently downloaded software applications in the history of the Internet.  Provides music enthusiasts with an easy-to-use, high quality network to freely exchange music files with other members of the Napster community.  Lawsuit filed in December 1999 by A&M Records later joined by Record Industry Association of America (RIAA) along with major music labels.  October 2000, Napster partnered with Bertelsmann AG to develop a membership-based service. History

4. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Edel Music and TVT Records joined Bertelsmann- Napster alliance in January 2001.  June 2001, Napster partnered with MusicNet, a music download venture involving AOL Time Warner, Bertelsmann’s BMG, EMI, and RealNetworks.  Signed commercial distribution deal with AIM (Association of Independent Music) and IMPALA (Independent Music Companies Association), two European organizations representing 150 European independent record labels. Additional Partnerships

5. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Litigation - Plaintiffs  Direct Infringement  Peers copying and distributing music files  Contributory Infringement  Napster facilitating the exchange  Vicarious Infringement  Any organization, corporation, or agency that allows the use of Napster’s services and the exchange of information through their networks (e.g. a university or office)

6. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Litigation - Defendant  Pencil Defense  Can be used to plagiarize, but has many other legal uses.  1984 Supreme Court Ruling, Betamax case  A new technology with substantial legitimate uses, and thus should not be shut down.  1992 Audio Home Recording Act  Allows people to transfer music online (applicable only to Digital Audio Tapes, not computers or the Web).  1998 Digital Millennium Copyright Act  As a “search engine” Napster has broad protection from copyright claims.

7. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  August 2000: District Court preliminarily prohibits Napster from facilitating the exchange of plaintiffs’ copyrighted music without express written permission of owners.  February 2001: Court of Appeals rejects Napster’s appeal of District Court ruling, finding that Napster’s actions constitute copyright infringement. Ruling

8. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Intellectual Property Rights  Many prominent examples of intellectual property rights issues.  AM & FM Radio  Audiocassettes  VCR/Betamax

9. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Copyright has always been a point of friction between content and consumer electronics companies.  Entertainment companies versus electronics manufacturers  Entertainment companies: hold persons liable for copyright infringement to protect their traditional distribution channels.  Electronics manufacturers: freedom to introduce new products without fear of lawsuits for abetting copyright infringement.  In the Internet age, these conflicts have come to the forefront because of the rapid pace of innovation. A House Divided

10. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Two Sony groups differ with each other with respect to Napster's file-swapping service.  Sony Music is a vociferous plaintiff in the lawsuit against Napster, while Sony Electronics is a member of a trade association that filed a friend of the court brief on Napster's behalf.  Refers back to Betamax case  Napster more of a service than a device - not protected by the Betamax precedent.  Electronics companies concerned this puts manufacturers at risk for lawsuits. A House Divided

11. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Broader Issues  Copyrighting and the problem of eliminating piracy  SAFE i.e. copyrights must be Secure, Affordable, in the right Format, and Easy to use.  Network effects - a community of 80m users  Industry regulation

12. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Partnerships and strategic alliances  MusicNet  PressPlay: Sony & Vivendi/Universal  Other Applications  Siemens Current Strategies

13. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  Bertelsmann is the world-wide leading Internet provider among media companies.  Withdrew lawsuit against Napster upon partnership.  Napster and Bertelsmann will seek support from others in the music industry to establish Napster as a widely accepted membership-based service and invite them to participate actively in this process.  Bertelsmann hopes to gain:  Huge customer base  Revenue generating service  Equity stake Bertelsmann & Napster

14. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval  A Napster-like system as central hub  Ensure SAFE practices  New Pricing Systems  Subscription Models  Time-based Models  Volume Related Pricing  Value Pricing Recommendations

15. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval If you can’t bill it, kill it!!! xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx If the glove doesn’t fit you must acquit. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Recommendations

16. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Questions?

17. Thad Davis - Damian Forbes - Jessica Salins - Oscar Sandoval Cartoons

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