Internet, Media &
Technology Analyst
Writer, Columnist,
Commentator
Paying the piper
By developing their own file-sharing services, record
labels could drive peer-to-peer exchanges underground. That's if legal action
doesn't get the Napster clones first
By Jose M Guardia - March 14, 2001
After months of defiant wrestling
with the music industry, and following a court decision that went against it,
file- swapping site Napster took everybody by surprise in February when it
offered to bury a remarkably expensive hatchet. The company said it would pay
the labels $1 billion (1.1 billion euros) over five years for the licensing
rights to the copyrighted songs exchanged through its service.
The music industry gave the
offer a cool reception, effectively saying that it was too little, too late. At
this stage, it's hard to figure out whether the offer was only a marketing
stunt or a sincere attempt to settle the issue out of the courts in order to
guarantee the continuity of the service.
But it's even more difficult to
imagine how Napster could ever be able to raise that billion dollars.
A few months ago Napster struck
an alliance with German media giant Bertelsmann. That day the company pledged
to build a new, secure and legal version of its system. Since then we've
learned that the model could be based on monthly user fees, which could range
from $5 (5.30 euros) to $10 (10.70 euros) a month depending on the service
(limited or unlimited downloads, ability to burn your own CD, etc).
Let's imagine for a second that
the music industry drops its legal action and joins "Napster 2". To
be sustainable, such a system would need to convince a significant number of
current Napster users to pay the monthly charge – the very same people Napster
itself has educated into getting everything for free.
Assuming that there will be
such a group of people (say, half of the current 60-million user base), and
provided that the digital rights management issues are solved (which remains a
daunting task), what would those Napster 2 customers actually pay for?
The answer is: not much.
If it maintains the current
Napster distributed architecture, a paid version wouldn't be selling music, but
merely providing listings and allowing searches for and access to music files
stored on other people's computers. There's nothing wrong with this of course.
But Napster can't control its users' hard drives, and therefore it cannot
guarantee the quality or the reliability of what's stored there.
The 60 million current users of
Napster are evidence that in its current free form it provides a valuable
service, despite the high probability that file quality, integrity, bit rate,
or download speed might not be perfect (or even that the file content doesn't
match the file name). After all, it doesn't cost anything. But if subscription
becomes the model, then users are going to ask that the Britney Spears song
they are downloading is indeed the original version of Oops – I Did It Again,
that it is of the best quality, it is not randomly cut in the middle, there are
no transfer errors, and it's not going to be downloaded at 1 Kb per second
because the user Napster pointed them to is having a "bad modem day".
The only way Napster could
guarantee this level of service – and if it doesn't, nobody's going to pay –
would be by storing quality-checked files in some centralised servers with
high-speed connections. But if that happens, you can say goodbye to the magic
of peer-to-peer (p-to-p), the file-sharing revolution and the rhetoric about
empowering the individual.
The rejection of Napster's $1
billion offer by the music industry has also overlapped with three other items
of news: the announcement of Duet, a Sony-Universal joint service for the sale
of secure, copyright-protected music; the media revelations about Snoopstar,
Bertelsmann's file-sharing search engine; and the legal actions initiated by
the Recording Industry Association of America (RIAA) against several Napster
clones.
The RIAA is suing groups
operating servers that offer a service similar to Napster, and it's likely that
it will succeed in shutting them down, at least those that are based in the US.
This would leave us with only a small number of "pure p-to-p"
systems, such as Gnutella, FreeNet and MojoNation, which don't use a central
server as a clearing house – as Napster does – but which are also much more
difficult to operate for less-sophisticated computer users.
At that point, we will discover
that most of the flamboyant Napster rhetoric of the last year had no
foundation: people have not been embracing p-to-p for itself; they just were
enthusiastic about easy access to free music. While the music industry may have
been slow in "getting it", it's now getting it better than anyone
else.
Here's the scenario. The record
industry (like any other business based on intellectual property) assumes that
it is materially impossible to build a 100 per cent foolproof system to prevent
any intellectual property theft, appropriation or misuse. By flexing its legal
muscles and pushing Napster and similar services aside, the industry will
ensure that the only room left will be for "pure" p-to-p music
exchanges which are, as stated earlier, more complicated, much less attractive
for mainstream users, and insular – they're not connected to each-other
If the record companies
simultaneously launch and promote their own legitimate services (and they're
all working on this; either overtly, as in the Duet project, or secretly, as
with Bertelsmann's Snoopstar), and if they can guarantee a rewarding, easy,
flawless customer experience, they'll be pushing free services more and more
into the underground.
Now consider Metcalfe's Law –
named after the American entrepreneur who defined it. It states that the actual
value of a network equals the square of the number of its members. In other
words, the beauty of a service like Napster is proportional to the number of
its users. A single, easily accessible system, with 60 million users sharing
hundreds of millions of music files and all at each other's disposal is an
irresistible proposition. But 10 or 20 smaller, complex and incompatible
services may not be a match for an easy-to-use, secure, paid-for-but-
not-too-expensive legal online music distribution system built and managed by
the industry itself.
Business, somebody once said, is the continuation of war with
other means. You may disagree, but you've got to acknowledge that what the
industry is trying to perform here is just the p-to-p version of the old
"divide and conquer" tactic.
© 2001 Jose M. Guardia, Barcelona -- All Rights Reserved