The Big Dirt Napster

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.