How the Internet has changed the face of the pop industry?

Other artists and record labels 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 say, "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.

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 but whether this should be viewed as a threat or simply the exploitation of a new medium by the music industry is another issue. Some record labels, most notably Epitaph have collaborated 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 do not 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, signing 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. 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 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.

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 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 mp3 player. 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 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 its 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, EMI, Sony and Universal are already launching efforts to combat Napster and take advantage of the opportunities the Internet offers. 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 collaborate with all labels, including the bigger ones and will offer a better service (faster downloads, better quality files, more variety) than Napster can.

However, with US$15 million invested in it, Napster will not die easily. Probably the most practical and realistic alternative that has been suggested is that Napster 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, Kazaa 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. 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 have either to turn into a paid subscription service, or show advertising. 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 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. In addition, 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, which they need to do.

The suggestion is that Napster develops some system of paying royalties to artists whose songs are downloaded over their software. It is the only way 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. The recommendation is that Napster subsidise the cost of the royalty payments by showing advertising within the application. This advertising could be used by advertisers to target music enthusiasts, meaning increased revenue for Napster. The belief is that if the royalty option, subsidised by advertising is implemented, Napster will be able to continue safely and profitably.

Andrew Dawson 5U 17/9/01