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Lost in Cyberspace


© 2000 by H.B. Koplowitz

Here's the part I don't get. You are downloading music over the Internet to your personal computer from someone else's personal computer. There's no album cover, no liner notes, no credits, not even a copyright notice. Just the music. There's also no quality control. You don't know which version of a song you are getting and whether it was "ripped" straight off a CD or scratchy vinyl. Whether it's the original song, a cover or an extended bootleg concert version recorded with someone's pocket tape recorder and nondirectional mike. It might even be an ad for a porno site or a computer virus. And there's no consistency to the downloads -- you may have a cable connection but all they have is a 56k modem. Sometimes the bytes on the information superhighway motor right along, other times downloads slow to a crawl, not to mention the periodic crashes.

So the part I don't get is how do you charge for something like that? What sort of rate structure do you devise that can satisfy a recording industry used to keeping prices artificially high, artists, promoters and hangerson used to keeping themselves artificially high, and the 34 million users of the fastest growing online community in the world, who have lately gotten used to getting their music for free?

Such are the calculations being made by upstart music file-sharing company Napster, and Bertelsmann, owner of one of the Big 5 record companies, BMG, as they embark on one of the strangest new strategic alliances since Hitler met Stalin. OK, it's a cheap shot. Just because Bertelsmann happens to be a German company that likes to gobble up other companies, like Random House, doesn't make it Hitlerian, and just because Napster up to now has been free doesn't make it communist. But as the company makes its way into what they call a market economy, music lovers and the music business alike are in for some shock therapy.

Earlier I predicted that the music industry, as we know it, was dead on account of Napster <>, which I called the first killer computer application of the new millennium. Napster was invented a couple years ago by Shawn Fanning, at the time a 19-year-old freshman in computer science at Northeastern University in Boston, who just wanted to make it easier to trade MP3 music files over the Internet. Frustrated with existing methods, he invented the simple but elegant Napster. Based on instant messaging software, Napster bypasses e-mail and the World Wide Web to let people search for and download MP3 files directly from each other's computers.

With Napster you can search for a song by name or band and in seconds get a list of 100 other users from whose computer you can try to download the song for free. Meanwhile, someone else might be downloading an MP3 file from your computer to theirs. Napster also has instant messages and chat rooms, so music fans can communicate in real time, creating an online community that has been growing faster than America Online.

Sensing he might be onto something, Fanning dropped out of college and moved to Silicon Valley to found, which got itself a respectable CEO and some fat venture capital. But because neither the music companies nor the artists (nor Napster!) were getting a dime from the millions of songs being traded with Napster, the music industry sued for music piracy. It seemed to have the upper hand when a judge basically ordered Napster to shut down, although another judge stayed that order until trial. Holding their collective breaths are a lot of other industries, like film and publishing, whose products could similarly be freely copied and distributed with other file-sharing software programs like Napster.

Meanwhile, Napster continued to develop its product, linking its servers together, making even more songs available to users, and releasing an official full-featured version for Apple computer users. Now Napster seems to have cracked the so-called cartel of major record companies opposing it by entering into a partnership with Bertelsmann, the corporate parent of BMG records, setting off howls of protest not so much from the other major labels as rabid Napster fans alarmed that Fanning has sold out to the man.

So what does the future hold for Napster? In their Halloween announcement of a strategic alliance, Bertelsmann agreed to drop its lawsuit against Napster and make its catalog available once a secure system for trading tunes was established. The Recording Industry Association of America was reportedly pleased with the agreement, although its piracy lawsuit against Napster continues for now.

The new company was cryptic in its description of its new business model, calling it a "membership-based service that preserves the Napster experience," which leaves room for charging by the hour, month or song, although one number being bandied about is $5 a month. The company also promised "there will always be a free, promotional file-sharing element to Napster," which leaves room for some kind of freewheeling trading similar to what is going on now.

Imagine a two-tiered system with some sort of pay service for direct downloading from the music libraries of the major labels who guarantee quality and other "value-added" features, alongside a free worldwide music swap meet, a global MP3 trading bizarre, as is. With the free system you'd sometimes get what you paid for. But as competition to the pay service, it would tend to push prices down while keeping the quality of the pay service high. So just because the record industry is dead as we know it doesn't necessarily mean the record industry is dead.

copyright 2000 by H.B. Koplowitz, all rights reserved.
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