SAN FRANCISCO - Two federal appeals judges Friday granted Napster Inc. a stay allowing the wildly popular music trading service to remain online - at least temporarily.
The service was facing a midnight PDT deadline for shutting down after a lower court judge sided with the recording industry, which claimed Napster allows users to violate copyrights.
Even though the Recording Industry Association of America could still appeal Friday's decision - either to the full 9th U.S. Circuit Court of Appeals or the U.S. Supreme Court - Napster employees screamed jubilantly at hearing a stay had been issued, a company spokeswoman said.
Friday's ruling means Napster can remain in operation at least until the lawsuit goes to trial; no trial date has been set.
''I am happy and grateful that we do not have to turn away our 20 million users and that we can continue to help artists,'' said Napster founder Shawn Fanning. ''We'll keep working and hoping for the best.''
Fanning and Napster's CEO were hunkered down at the company's headquarters trying to figure out a way to comply with the injunction if the stay was denied. Upon news that the stay was granted, a small celebration with apple juice and bottled water began.
''People are happy. I think grateful is a word that people are using a lot,'' Barry said. ''What we're really looking forward to is having the ability to present our case in a full and fair manner.''
In contrast, RIAA President Hilary Rosen was disappointed with the last-minute reprieve but issued a statement saying: ''We remain confident that the Court will ultimately affirm once it has had an opportunity to review the facts and the law.''
''It is frustrating, of course, that the tens of millions of daily infringements occurring on Napster will be able to continue, at least temporarily,'' Rosen said.
Before the stay, thousands of outraged Napster users had pledged to boycott the recording industry in retaliation for its lawsuit - and looked for alternative free music-sharing programs.
''The recording industry is a mafia,'' said Christian Viveros, a 37-year-old amateur musician from Russells Point, Ohio, encountered in a Napster chat room. ''Too much greed in the world.''
On one Web site, more than 75,000 people had signed an electronic petition vowing not to buy music unless the Recording Industry Association of America dropped its lawsuit against Napster. That would cost the industry more than $1 million if each refused to buy just one $15 CD.
Napster contends it is an Internet service provider and not responsible for the actions of its users. It characterized Wednesday's injunction as a death sentence.
The industry said giving Napster an 11th-hour reprieve would ''increase dramatically'' the harm it has suffered from ''massive copyright infringement.''
But the appeals judges said ''substantial questions'' had been raised about ''the merits and form of the injunction.''
Napster's Web site on Friday advertised a ''Buy-Cott,'' urging users to purchase CDs this weekend by artists who have embraced the file-sharing phenomenon, including Limp Bizkit, Chuck D and Marianne Faithfull.
Users worldwide also held Napster-download marathons, and developers of alternatives to Napster's distribution system worked feverishly to provide their software to people hooked on Internet music trading. Napster says it has 20 million patrons.
''We're trying to give the people what they've been looking for,'' said Dale ''Diego'' Hayes, a developer of AudioGnome, a Napster clone originally scheduled to be released in a few weeks. The work was accelerated after the order that Napster be turned off.
Instead of relying on a centrally located batch of computer servers like Napster, AudioGnome will rely on dozens of independent servers running a free program called OpenNap.
Adam Mead, a 24-year-old systems manager, has an OpenNap server he's been running for more than three months in Albuquerque, N.M. He was expecting traffic to skyrocket on Saturday if Napster had to close.
''If they serve me with legal documents requesting me to shut down or they're going to sue me, I'll shut it down,'' he said. ''I don't have a million dollars.''
Greed is what the Napster dispute is all about, Mead said.
''They decided to put a stop to Napster only because it was so popular because it was easy to use,'' he said. ''Before Napster, there were five or six ways to get MP3s off the Net.''
Now there are a few dozen ways to get MP3s - compressed audio files - and some of them appear downright unstoppable.
They include Freenet, an anarchic network created by Irish-born Ian Clarke, in which each user exposes his or her computer to the Internet, making each participating computer a file-sharing server.
Since it was released last year, 110,000 copies of Freenet have been downloaded, said Clarke, 10,000 of them since Wednesday's Napster ruling.
Clarke designed Freenet to distribute all kinds of information without fear of censorship. He said he wasn't thinking about copyrighted music files.
Unlike Napster, Freenet is invulnerable to any attack, be it from cyberspace or corporate lawyers, Clarke said.
''Freenet has been designed so that even one of its developers - I would have no idea how to go about shutting it down,'' he said.
Back at Napster headquarters in Redwood City, Calif., Shawn Fanning emerged from the front doors, hands stuffed sheepishly in his pockets as he spoke briefly about the day's events surrounding his company - a dorm-room pastime turned international rallying cry for Internet free spirit.
''I started it as a small project. To me this is pretty surreal,'' Fanning said.
On the Net:
http://www.napster.org.uk for Naphoria, which is not affiliated with Napster and promotes alternatives to Napster.
http://freenet.sourceforge.net/ for information on Freenet