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Digital Music - What Napster Coined

By Paul A. Greenberg E-Commerce Times ECT News Network
Aug 9, 2001 2:40 PM PT

Perhaps the most ironic development in the ongoing struggle of music file-sharing service Napster is that the site spawned an entire industry of digital music.

Digital Music - What Napster Coined

Because Napster has found itself more focused on litigation than on doing business, its archrivals in the recording industry have stepped up. In a matter of weeks, Napster could well be overshadowed by the very corporate giants it sought to displace with its business model.

Consider the names: Warner Music Group, EMI and BMG are backing MusicNet. And Sony and Universal Music are behind the other new entrant, Pressplay.

Depending on how you view the new economy, the emergence of recording industry-backed digital music services is either great news or a defeat for ingenuity.

Two Sides of a Coin

The good news would be that multibillion dollar conglomerates recognize the power of electronic commerce and the potential it has to grow the consumer base.

The bad news would be that the Internet was supposed to be a place where clever entrepreneurs with a dream could change the world.

Enter young Shawn Fanning, the founder of Napster. If Napster is trounced by powerful commercial traditionalists, will the next wunderkind be discouraged from exercising his or her imagination electronically?

And if so, will e-commerce turn into simply more of the same old economy, but on a computer screen?

Making Coin

Perhaps, but there are codes that Napster failed to honor. First, the copyright laws that were established hundreds of years ago withstood the test of time until Napster came along. It is essential that those laws be respected by the New Economy.

Second, there were thousands of artists whose work was being essentially traded online for free. Our market system calls for individuals to be compensated for their work.

The new fee-based models from Pressplay and MusicNet have taken into account the need to compensate artists. Unlike Napster, the new services will not allow users to copy music to CDs or to upload it to portable players (although PressPlay has a plan to allow its music to be used on portable players in the future, for a fee).

Your average Joe on the street may not take kindly to these restrictions, but because of the shape of our system, these are limitations that rightfully should have been imposed by Napster. Ultimately those standards were applied to Napster, which is currently not online.

Coin of the Realm

Even if Napster ends up neutralized or fully defeated, why should we believe free file swapping will end? File-sharing technology exists and, as they say, where there's a will ...

Consider some easy ways around the dilemma. First, what if a digital music service operates outside the borders of the U.S.? What would keep it from enabling free file-sharing of copyrighted music? If the service originated in Europe, for example, it would be much more complicated for the big five music firms to sue it for infringement of U.S.-based copyright laws.

Further, as Napster tries to meet its legal challenges, a number of Napster clones have emerged to carry the free file-sharing torch. Such companies are likely to multiply exponentially in response to the recording industry's play-for-pay models.

It is beginning to appear that even if Napster survives its legal challenges, the sheer number of clones that have readily adopted its business model may crush it. That's bad news for the recording industry, because how many legal fights can it realistically initiate and endure?

Coin Operated

How this all plays out may be one of the more interesting shows to watch in the evolution of e-commerce.

If there is one plus to the high profile fight among digital music providers, it may be an increased awareness among consumers that there is such a thing as online music. What may have remained strictly a teen phenomenon or an industry with a cult following could easily go much more mainstream thanks to the well-publicized struggles.

According to Jupiter Media Metrix, Americans will spend upwards of $6 billion on online music by 2006. That's music to the ears of digital music providers.

Still, there are skeptics among us. Raise your hand if you remember when VCRs were first mass marketed. There was immediately a firestorm of controversy about recording television programs and movies for free. Would we still be recording "Survivor" today while we watched "Friends" on another network, if we had to pay to do so?

What do you think? Let's talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.

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