THE
ESSENTIAL NAPSTER
An ArtsJournal Primer
By
Jack Miles & Douglas McLennan
The
battle over Napster—it should surprise no one—is neither about
the sacred principle of intellectual property rights nor about
the need for fair compensation to artists. It’s about who
gets to keep the profits of a lucrative worldwide multi-billion-dollar
business.
Intellectual
property
Those
who create something – a book, a song, a movie – should and
already do have the legal right to own and sell it. They should
- as they do now - have the right to control distribution
of that work, including the right to sell distribution rights
to someone else.
In
truth, however, real control over
creative property [NYTimes]
has long rested with those who own the physical means of reproduction
and distribution, those who control the pipeline to an audience
– the TV networks and movie studios, the publishers, and the
record companies. They decide who gets in the pipeline, and
they earn most
of the profits [Boston Globe].
Napster threatens them because, virtually overnight, it has
become a gigantic, consumer-controlled alternative reproduction
and distribution system.
Whether
artists will gain or lose money from this in the long run
is increasingly
an open question [Nando Times].
But that those who now monopolize reproduction and distribution
will lose from it even in the short run is no question at
all.
Consider
the Costs of Making a Music Recording
It
costs about $2 to manufacture a compact disc. That includes
pressing the disc, printing a cover, and packaging in a plastic
“jewel case.” In a recording contract with an artist who has
a following, the
artist typically gets $2-$3 per disc [Chicago
Tribune] as a royalty. Out of the artist’s take usually
come all or most of the music production costs: a producer,
the studio, the side performers if any, and the mixing – in
other words, all the costs of creating and producing a distribution-ready
master.
By
the time a disc gets to the consumer, it typically is priced
at $16-$19, which translates into at least a 300-500 percent
markup over the combined cost of recording and manufacturing.
Music recording is a $12 billion global business, and so,
even allowing for the cost of publicity, promotion, inventory,
and accounting, profits to the middleman are huge.
Digital
reproduction, the keepers of the traditional music pipeline
would have us believe, threatens the very core of the music
industry. If music fans can get their music for free, who
will pay for it? Artists should get paid for their work,
the companies insist.
No
argument from artists there. When the digital downloading
of music files first got hot about a year and a half ago,
a number of
musicians [Dallas Morning News]
(notably heavy-metal
band Metallica [Salon]) filed
copyright infringement lawsuits [Salon]
against Napster and MP3.com, at the time the most prominent
music download site.
But
eventually it became evident that digital distribution actually
helped more
artists [Globe & Mail]
than it hurt. On the internet there is no pipeline controlled
by someone else. Musicians could put their own music up on
the net or make their own CD copies and sell them. Fans could
more easily sample musicians’ work and decide whether or not
to buy. The internet has become
an efficient marketing tool [CBC]
for musicians trying to get their music out to an audience.
So
who is
the real loser? [Salon] It’s
the middlemen, who could see that their power, which consists
largely of the ability to control distribution of product,
was quickly vanishing.
The
recording industry managed to threaten
MP3.com [ABCNews.com] into
line, ending the site’s
free downloading [Orange County Register]
of copyrighted material. But Napster was something entirely
different. Whereas MP3.com is an actual site, an actual place,
Napster is a program. It neither offers its own music (copyrighted
or otherwise) itself or makes copies of anything. It’s a program
that enables users to share with one another.
Simple
to use, the program has been hugely popular with music fans,
and an astonishing “one
out of three teens [Washington Post]
ages 12 to 17 download songs through Napster.” Indeed,
Napster’s CEO reported last October that the service has 38
million users - 13 million more [The
Age] than online media giant America Online. In September
Napster recorded as many as 100 million simultaneous users
during peak-use hours, compared to AOL’s 1.6 million. That
month 1.4 billion
songs [The Age] were downloaded
over the internet. Today Napster is said to have grown to
55 million users.
Legally,
the recording companies didn’t have to prove they had been
damaged by all this downloading—that
would have been difficult [Wired]
since sales
of recordings actually went up [The
Age] last year by about 4 percent—only that their
copyrights had been violated. Much as the companies would
love to make their case on moral grounds – people should pay
for other people’s work – it’s not a point
they can make [Wired] with
much
authority [ZDNet]. For years
they
have been making exorbitant profits
[Variety] on the backs of the artists they now want
to say they’re protecting.
Why
Shutting Down Napster Doesn’t Matter
On
February 12, a US judge made a ruling that could shut Napster
down. The file trader, desperately trying to stay alive, offered
to pay [Salon] the recording
industry $1 billion in royalties, but for obvious reasons
the industry rejected the offer
[Wired]. The money, as staggering
an amount as it is, doesn’t come close to compensating the
companies for their loss of control and the middleman cut.
Up
till now the recording industry was so intent on protecting
its traditional turf that it failed to
innovate [ZDNet] and make it easy
[Wired] for fans to download music
legally. Even if you want to pay for music online it hasn’t
been practically possible [Boston
Globe]. Now it turns out that the recording companies
have been rushing [BBC] to
get their
own file-trading service [Inside.com]
to market.
That’s
probably the clearest indication that slamming the door on
Napster doesn’t signal
the end [Feed] of music-file
trading. Even if Napster goes away, there are already other
swapping programs [Wired]
ready to take its place
[Wired]. Consumer
resistance [Wired] to the
music industry’s high prices has grown. The technology, once
out of the bag, isn’t going to
go away [NY Times], and software
writers have a proud tradition of keeping a step or two ahead
of would-be regulators.
Part of the public’s fascination with Napster is that it was invented by
a 19-year-old
[Time] with few resources. Innovation
is the American dream [Inside.com].
Within the space of a year, “during peak hours, a startup
with a few dozen employees, beta software and no income stream
accounted for two-thirds as many Internet connections as a
15-year-old Net behemoth [AOL] with 15,000 employees and a
pre-merger market capitalization of $108.5 billion."
As
the internet gets faster and broadband becomes more
commonly available, music-on-demand from wherever you happen
to be will become a reality [Reason].
The cost of music to consumers should come down. And artists
ought to be able to keep
more of what their music earns. [The
Age]
What is likely
to go away [NY Times], no
matter how many legal battles they
press [Wired] and win, are
the
old-style recording companies [Inside.com]
and their big fat slice of the pie. Recording companies do
provide a service of promoting artists, and, when the power
of traditional distribution
is taken from the hands of the few [Wired],
there will still be a need for artist promotion - maybe even
more of a need. Those record labels that are good at adapting
will survive, even flourish
Ironically,
the huge new traffic in music-file downloading seems to have goosed sales [Newsbytes]
of compact discs. But, as the technology and quality of downloadable
music improves, it’s going to be increasingly difficult to
charge $16-$18 for a traditional CD that the consumer
may or may not like when they get it home.
Letters,
opinions, reactions, suggestions?
Send your e-mail to mclennan@artsjournal.com
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