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 This file format is also becoming outdated and being used less and less.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 until (and if) the court rules against Napster.
Other artists and record labels (http://www.napster.com/speakout/artists.html and http://www.napster.com/speakout/labels.html) have responded to the advent of Napster and similar applications in a more positive way, embracing the new technology rather than rejecting it. On their website, the Offspring says “MP3 technology and programs such as Napster [are] a vital and necessary means to promote music and foster better relationships with our fans.” Interestingly enough, the Offspring’s last album, Americana, was made available online illegally before commercially released, yet it is the band’s best-selling album to date. Furthermore, a number of surveys have proven that Napster users actually buy more CDs, after ’sampling’ the songs online (http://www.theregister.co.uk/content/1/12093.html). It is this issue that is at the core of the RIAA lawsuit, whether Napster and similar applications will mean reduced CD sales. Napster does challenge the traditional distribution of music (CDs, cassettes, vinyl etc) but whether this should be viewed as a threat or simply a new medium to be exploited by the music industry is another issue. Some record labels, most notably Epitaph (http://www.epitaph.com) have partnered with sites like e-music.com to sell full albums and single songs in MP3 format over the web. In this case, the record company has in fact gained a new distribution method, rather than seeing it as the ‘enemy’. Of course, in this scenario, the record company still gets a cut of the profits, something that artists’ whose songs are downloaded through Napster don’t get.
The fact that Napster is free and more convenient than visiting a record store makes it an appealing way to get music for consumers. The problem the record companies have is that there is no way of regulating who has access to the information, and hence no way of profiting from it.
Napster also facilitates international distribution for unsigned artists. This also threatens record labels. Previously, without being signed to a record label, an artist simply could not get the exposure to make a living as a musician. With the Internet, sites like mp3.com and Napster, this is now possible.
While Napster does allow music sharing to an extent that could theoretically destroy the retail music industry, stopping Napster will not stop all their problems. Record labels need to see this new technology not as a threat, but as a challenge. They need to come up with ideas to encourage people to buy CDs (multimedia components, attractive artwork, lyrics, picture books etc). Perhaps if they offered better services to their signed artists, fewer artists would want to release their music themselves.
Napster challenges the music industry’s monopoly on distribution. People can now download music for free in their own homes and artists can release their music themselves. In theory, this could mean the end of record labels and other associated companies, and that is why groups like the RIAA are so worried.
3. Possible Solutions
The music industry’s response to Napster is similar to the response to the introduction of cassette tapes and VCRs. Both new technologies allowed people to record and duplicate copyrighted information and at the time, these were seen as threats to the respective industries, but time has proven that tape recordings are no substitute for professional, commercial recordings. The same can be said for Napster; while the songs can be downloaded, they are not CD quality (for the most part) and complete albums are very difficult to come by on Napster. Once an MP3 is downloaded, it can only be listened to on a computer (or a walkman-style device, such as RIO). CDs, on the other hand, are more portable – they can be easily listened to anywhere, on a computer, stereo, walkman, in a car, friends’ stereos etc. Although MP3s can be written to CDs, the level of expertise required to do this means that for most people it is easier to buy a commercial CD.
The ‘extras’ consumers get when they purchase commercial CDs also encourage people to buy CDs. Artwork, lyrics, pictures and other liner information make the purchase of a CD more valuable than just the music. However, new advancements such as multimedia components for computers (already available on some CDs, eg Blue Plate Special by the Dance Hall Crashers) including video footage, photos, games etc would encourage the purchase of CDs more so. If CDs were released with better ‘extras’ and reduced prices, people would be more likely to purchase them. In this case, Napster could continue, serving it’s purpose as a ‘try before you buy’ application for the music industry.
Just as people still purchase and rent videos even though they can record movies from TV and borrow tapes from friends, people will continue to buy CDs, and will be encouraged even more so if prices are reduced and extras given away with the music.
Music industry players such as BMG (Bertelsmann Music Group), EMI, Sony and Universal are already launching efforts to combat Napster and take advantage of the opportunities the Internet offers (http://www.theregister.co.uk/content/6/12778.html). These companies are launching their own MP3 sales and distribution services, or offering subscription services that allow registered users to download unlimited tracks for a limited time. It is also worth noting that e-music.com already offers this type of service, including a monthly subscription service. However, on e-music, users can download unlimited MP3s from a number of labels, whereas the label MP3 distribution sites will exclusively distribute the record label’s MP3s. Perhaps eventually sites like e-music.com will partner with all labels, including the bigger ones and will offer a better service (faster downloads, better quality files, more variety etc) than Napster can.
However, the fact that over US$15 million has been invested in Napster Inc means that Napster will not die easily. If the RIAA is successful in it’s current lawsuit against the company, Napster will just change direction. A few solutions have been suggested.
Probably the most practical and realistic alternative that has been suggested is that Napster Inc pays royalties to artists when their songs are downloaded, much like the radio pays artists when their songs are played.
Another solution is that Napster could work with the music industry to distribute certain sample tracks to the public. These tracks could be distributed royalty-free as promotion for the album, or Napster could agree to pay royalties.
Another solution being adopted by other similar information-sharing applications like Napster, Freenet and Gnutella is to make file transfers over the application anonymous. Adding to that, the fact that the central servers themselves do not have to contain any copyrighted files, tracking down users breaching copyright legislation will be incredibly difficult.
4. Pros and Cons of Possible Solutions
The option of Napster paying royalties to artists whose songs are downloaded would be a positive move because it would mean that artists receive fair compensation for their work.
However, on the other hand, to support the enormous cost of such a move, Napster would either have to turn into a paid subscription service, or show advertising (which wouldn’t necessarily cover the costs). Added to this, the cost of modifying the application, and working out a way to determine what songs have been downloaded, the administration costs for Napster would skyrocket.
The option of a cooperative effort with the music industry has the advantage of being totally legal and stopping all conflicts between Napster and the RIAA. However, such a model would mean a great reduction in the number of songs available and would eliminate the ’sharing’ aspect of the program.
The advantage of the anonymous peer-to-peer model is that if no corporation, individual or other entity claims ownership, no one can be sued. And because no files are stored on the central server, no copyright is being infringed there.
The disadvantage of this method, would be that Napster would still be breaking the law, and undoubtedly new legislation would be brought in and measures would be taken to stop the service. Furthermore, if Napster could not take credit officially for their software, then they could not profit from it (something they need to do, considering the investment in the company)
I believe that Napster is a valuable program and an indication of things to come. However, in its current state, it will have a very hard time remaining legal. I believe the only way Napster will survive will be to change its service (and it may in fact be forced to by the courts). I would suggest that Napster develops some system of paying royalties to artists whose songs are downloaded over their software. It is really the only practical way that Napster can continue and even though it will cost the company a lot to implement this system, it will mean that Napster will be safe from litigation by the music industry. It will mean that Napster users will no longer have to worry that they are breaking the law, and will encourage artists to embrace online distribution. I would recommend that Napster subsidises the cost of the royalty payments by showing advertising within the application (much like GetRight (http://www.getright.com/) and CuteFTP (http://www.cuteftp.com) do). This advertising could be used by advertisers to target music enthusiasts, meaning increased revenue for Napster. I believe that if the royalty option, subsidised by advertising is implemented, Napster will be able to continue safely and profitably.