Is this the beginning of the end of Napster?

Beleaguered Napster, the red-hot music-swapping community that has the record industry up in arms, lost its first round in court on Monday. Hoping to rid itself of a threatening copyright infringement lawsuit brought on by the Recording Industry Association of America, Napster had asked a federal judge to throw the case out -- insisting that the company's music-swapping actions were exempt from liability by the Digital Millennium Copyright Act (DMCA). If the court had agreed, Napster would have been off scot-free. Unfortunately for Napster, the judge did not agree. Chief Judge Marilyn Hall Patel of the U.S. District Court for the Northern District of California rejected Napster's DMCA defense, delivering the RIAA its second high-profile courtroom win against an online foe in less than two weeks. (The association was victorious against MP3.com in a separate copyright suit on April 28.) "This hearing was Napster's attempt to escape responsibility for aiding and abetting wide-scale piracy and -- not surprisingly -- they lost," said Hilary Rosen, president and CEO of the RIAA. Napster executives declined to comment. Many legal experts concede that Napster's maneuver for an early and decisive victory was a long shot, so the ruling did not come as a shock. But a grim reality may now be setting in at Napster that the company faces the real possibility of being strangled to death in the courts. Although Napster boasts 10 million users after only eight months on the market, the company does not have hundreds of millions of dollars to bankroll expensive lawsuits, pay hefty damages or offer up nine-figure settlements with the record companies. After all, Napster is a company without revenue, let alone profits.