"Good morning and thank you for inviting me to appear before you today. I am Hank Barry, chief executive officer of Napster, Inc., and I represent the company and members of the Napster community. I would like to recognize Shawn Fanning, the inventor of Napster, who is sitting behind me.
"This Committee is at the center of the great Constitutional debates of our country and the protection of the rights we cherish as Americans. In the coming years, your Committee will continue its important oversight of the legal issues in the Internet world, and I greatly value the opportunity to contribute to that endeavor.
"Let me begin with a general point on which everyone in this room can agree: Americans love music, and Americans are listening to and making music like never before.
"Record sales and music radio listening are up; school bands, choirs and drum and bugle corps are back.
"Napster's success reflects that love of music. As of this morning, after less than a year, without any advertising or promotion, Napster has attracted nearly 20 million users. Over half of them are over 30 years of age and they are evenly split between men and women. In the evenings, we consistently have about 500,000 people using the service simultaneously. By comparison, that is about one third of the number of people using America Online at the same time.
"I would like to talk with you today about Napster's technology, Napster's impact, and Napster's future.
"Andy Grove, the Chairman of Intel, recently said, 'The whole Internet could be rearchitected by Napster-like technology.' Let me try to place his observation in some historical context.
"As you know, the Internet began as a redundant communication network among scientists involved in defense research. They needed to reliably share information that was distributed all over the system. The commercial use of the Internet for media purposes abandoned this structure. Instead, Internet companies adopted the broadcasting model, with large centralized computers 'serving' information to the consumer's PC as if it were a television receiver. Serving, not sharing, became the dominant approach.
"Shawn Fanning began a revolution that is returning the Internet to its roots. Napster is an application that allows users to learn about others' tastes and share their MP3 files. If users choose to share files -- and they are not required to -- the application makes a list of those files, and sends the list and only the list to become part of the central Napster directory. The Napster directory, then, is a temporary and ever-changing list of all the files that members of the community are willing to share.
"Users can search that list, comment on the files on others' computers, see what other people like, and chat about all this.
"They do this all for no money, expecting nothing in return, on a person-to-person basis. That's it.
"Napster does not copy files. It does not provide the technology for copying files. Napster does not make MP3 files. It does not transfer files. Napster simply facilitates communication among people interested in music. It is a return to the original information sharing approach of the Internet, allowing for a depth and a scale of information that is truly revolutionary.
"Napster is helping, not hurting, the recording and music publishing industry and artists. A chorus of studies shows that Napster users buy more records as a result of using Napster and that sampling music before buying is the most important reason people use Napster.
"Users who transfer more than 20 files soon delete over 95 percent of those files. In the last 6 months record sales are up more than 8 percent from the previous year -- an increase of more than $1 billion a year. Like other advances in technology, what Napster shows is that more access to music leads to more interest in music.
"Lawsuits against Napster contend that our 20 million users, the recording and music publishing industry's best customers, are guilty of copyright infringement. We strongly disagree. Copyright is not absolute. It has limits.
"Companies that hold copyrights on behalf of creators, and which control distribution of creative works, have a strong inclination to change the copyright laws from a balanced vehicle for public enrichment to an unbalanced engine of control. Copyright holders traditionally are reluctant to allow new technologies to emerge.
"This Committee's hearing records are replete with examples of new technologies struggling to survive as copyright holders argue that these new technologies will impede their ability to be compensated for copyrighted works. You and the courts have allowed -- over their objections -- technological advances like radio, the cassette player, cable television, and the VCR -- advances which proved to be a financial boon to these same concerned copyright holders.
"Napster can work with the recording and music publishing industries. We remain enthusiastic about creating a market-based solution that will benefit consumers, artists, and the traditional recording and music publishing companies. Since my first day on the job, I have been reaching out to the major recording and music publishing labels.
"In conclusion, we should not brand as thieves the 20 million Americans that enjoy the Napster service. Instead, we should let history be our guide.
"Americans love music. Every time a new technology makes it easier for listeners to discover, enjoy and share music, the recording and music publishing industry benefits. Thank you for your time and attention today."