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The Big Dirt Napster 

A digital new era finds the labels asleep

Wednesday, May 15 2002
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Last July, a court ordered the wildly popular online file-sharing service Napster to remove from its server every single file that violated a copyright. Because almost all of those files were music tracks that users had ”ripped“ from CDs, there was no way to obey. Napster shut down.

Almost immediately, the company whose name was synonymous with the Internet’s ”information must be free“ ethic announced that it would reopen as a for-pay service. Napster‘s Web site (www.napster.com), as recently as February 4, announced that ”our new technology is almost ready for prime time.“ That declaration has since been ditched in favor of decidedly less optimistic wording: ”Thanks for sticking with us through this confusing time . . . We’ll keep you posted.“

On March 27, Wired News reported that Napster would not reopen for legitimate business until December. The nine-month timetable comes from a court ruling on March 26 that Napster has nine months to examine the recording industry‘s evidence against it in the ongoing lawsuit brought by the record labels that shut down Napster in the first place. By that time Napster will no longer be the pioneer that it was two years ago. It will be just one more player in the online music field. And that’s just one problem facing Napster. Some others:

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l Napster must battle its own clones. Napster-like free services still offer access to hundreds of thousands of songs without the benefit of copyright-holder imprimatur -- and with no cover charge.

l Barring a settlement, the Napster case, brought against the company by the Recording Industry Association of America (which represents the major labels), could go to trial early next year. The industry expects to win a damage award that, says RIAA senior vice president Matthew Oppenheim, ”will be substantial.“

l The RIAA is also suing three companies that rely on a software application called FastTrack to accomplish exactly what Napster was closed down for: letting users ”share“ files on their computers, including copyrighted music files, with anyone on the Internet. That lawsuit is scheduled to go to trial in Los Angeles October 1. (The Napster case is in a San Francisco court.)

l The new Napster may not offer more than a fraction of the music that was free for the taking on Napster Classic. The Web site tells us that Napster is ”getting closer to a settlement with the major record companies that would clear away our legal troubles and secure a good range of music for the Napster community.“

A ”good range“? That‘s nothing by Napster Classic standards. The vintage Napster search made it just as easy to find, say, Free Kitten’s cover of Serge Gainsbourg‘s ”Teenie Weenie Boppie“ as to dig up a bootleg MP3 of ”Baby One More Time.“ Napster had the works.

Napster, the company, is saying little else these days. No date for the new launch and very few details are available on the Web site. Or from Napster itself. When I called one of Napster’s PR mouthpieces, trying to set up an interview with someone, anyone, who could speak for the company, I was told repeatedly that ”I‘m not going to be able to get you anyone from Napster.“

The record labels, while holding the legal upper hand at present, have headaches of their own:

l A Dutch court on March 28 dealt a major blow to a case against the file-sharing software company KaZaA, ruling that the company is not to blame if its users trade in copyrighted music.

l The labels’ legal music-download sites -- MusicNet and Pressplay -- allow limited numbers of downloads and utilize rigid copy protection that restricts users from burning legally purchased songs onto CDs. In MusicNet‘s case, CD burning is altogether verboten. Pressplay confines its customers to 20 burns per month, about the capacity of a single blank CD.

l MusicNet and Pressplay are joint ventures of the major labels. MusicNet is a division of AOLTime Warner--Bertelsmann--EMI, operating in cahoots with Internet audio firm RealNetworks. Pressplay combines the efforts of Sony and Vivendi Universal. Last August, before either site went live, the U.S. Justice Department began probing them to see if the Big Five labels were using their control over music copyrights to corner the online music market.

l A third major service, EMusic, claims 45,000 subscribers (at $9.99 or $14.99 per month) and allows unrestricted use of the MP3 files it sells, but lacks licensing from major labels.

Gnutella, a peer-to-peer network that connects any computer on the Net with thousands of its closest computer friends, is based on open-source software code and uses no central server. Dozens make the connection software and give it away free. To stop unauthorized song swapping via Gnutella, the RIAA would have to lean on hundreds of thousands of Gnutella users -- one by one. When I asked Oppenheim what the RIAA planned to do about Gnutella, he said, ”I don’t know.“

He knows what to do about everything else: sue. In addition to the ongoing Napster suit, the RIAA is suing, in conjunction with a coalition of Hollywood studios, three file-sharing software firms: West Indies--based Grokster, KaZaA, and Streamcast, maker of the Morpheus file-sharing software, headquartered in a suburb of Nashville, Tennessee. The three companies used the same a FastTrack software, allowing them to form one giant network until Streamcast‘s Morpheus switched from FastTrack to Gnutella. According to some users, the FastTrack network has more song files than Napster ever did.

After the RIAA flattened Napster with its legal gavel, what made these three companies think they could simply pick up where Napster left off? Were they insane?

Not necessarily. There is an important difference between the FastTrack-based companies and the original Napster. The FastTrack ”peer to peer“ services are set up to connect users with each other. When you download a song from one of those services, you are actually connecting to the hard drive of someone else’s personal computer. Napster relied on a central ”indexing“ computer. That computer, according to the court, gave Napster control over files on its network. Therefore, the court ruled, Napster was responsible for eliminating all copyright violators. FastTrack and Gnutella say that they use no central filing system, and simply allow computer users to connect with one another efficiently. However, it recently became clear that for FastTrack, that claim may not be entirely true, which is what led Streamcast to switch to the slower but more decentralized Gnutella.

According to a motion filed by the three FastTrack-based companies on February 25, they are protected by the U.S. Supreme Court‘s 1984 ”Betamax“ decision, a landmark case in which the court established that companies are not responsible for customers who use their products to violate copyrights, as long as said products (in the Betamax case, VCRs) were ”merely capable of substantial noninfringing uses.’“

Because the peer-to-peer software programs can be used for legal purposes, such as exchanging texts of literature, freeware computer programs, government documents and ”authorized“ music files, the companies that make the software are safe. Or so the defendants argue. They may be right. Even in the Napster case, the court abided by the Betamax ruling, holding that Napster was responsible only for eliminating illegal files that come through its central computer.

”These lawsuits are aimed at rolling back the principle announced in the Betamax case that technology companies are not held responsible for what their users may be up to,“ explains Fred von Lohmann, senior intellectual-property attorney for the nonprofit, San Francisco--based Electronic Frontier Foundation, which is assisting the three companies with their defense.

One solution to the problem is to make the product cheaper. While some people will always take the road to digital perdition, if CDs were priced more reasonably, there would be far less temptation for honest music fans to become virtual pirates. Why are CDs so expensive, anyway? On the RIAA‘s Web site I found a document that purports to answer that question. According to the RIAA site, the ”most expensive part of the music business today“ is marketing and promotion. When you buy a CD, the industry charges you for its expenses in persuading you to buy that CD. If the music labels stopped pouring money into promotion, one can infer from the RIAA’s document, the price of CDs would plummet.

Sound crazy? You bet. Eliminating promotion budgets would be a radical change in the way the music industry does business. The music industry‘s lawsuits are aimed at preserving its own status quo, but to survive the digital epoch, it must adapt. That means changing the way music is marketed. So far, like a victim of natural selection, no adaptation has been forthcoming.

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