The Napster software (http://www.napster.com), launched early in 1999, allows internet users to share and download MP3 files directly from any computer connected to the Napster network. The software is used by downloading a client program from the Napster site and then connecting to the network through this software, which allows sharing (uploading and downloading) of MP3 files between all users connected to the network. While Napster does not condone copyright infringement, there is no opportunity in the software to stop this, or for royalties to be paid to artists whose songs are being duplicated for free.
Unlike similar file-sharing applications (Gnutella, Freenet), Napster limits users to uploading/downloading of MP3 files only. These files are compressed wave (.wav) files. The advantage of MP3 files is that they are approximately one-tenth the size of the corresponding .wav file and can be close-to-CD-quality. It is for this reason that many artists, record labels and other music industry stakeholders are concerned by the MP3 file format and applications like Napster that simplify the sharing of copyrighted material.
Other file formats in common use on the Internet are not as threatening to the recording industry; primarily due to the reduced quality of the recording. Real audio (.ra, .rm) files have reduced sound quality (comparable to radio) and are usually streamed over a different protocol, allowing people to listen to songs without having (or being able) to download the source files. Another 'music' file format common on the internet is the midi format. These files are of no threat to the music industry because the files are not actually a recording of the music; rather a set of instructions to the computer as to what sounds to play (and there is no way to duplicate vocal tracks). This file format is also becoming outdated and being used less and less.
The reaction from recording artists, record labels and other music industry players has been varied, but primarily anti-Napster. The first action to be taken against Napster was by the band Metallica. In April of this year, they sued Napster Inc for copyright infringement. The case was settled out of court when Napster agreed to ban some 300,000 users who had allegedly downloaded Metallica songs. Again in June Napster Inc was sued for copyright infringement by The Recording Industry Association of America (RIAA), a trade group representing the US recording industry, alleging "Napster is... enabling and encouraging the illegal copying and distribution of copyrighted music". Napster claims that Audio Home Recording Act that permits copying of material for personal use, allows it's uses to swap MP3s. Napster further claims immunity by defining the company as an ISP under the Digital Millennium Copyright Act. The RIAA unsuccessfully applied to have an injunction to stop Napster's operations until after the court case in September, so Napster will continue to operate...