MP3.com was bloodied Friday. As of this writing, the online music service is trying to negotiate a settlement with RIAA. A U.S. District Court ruled Friday that the site's My.MP3.com storage service violated copyright law. But the music-user rebellion sparked by this landmark technology is by no means over. The manner in which music is disseminated has been changed for good, whether record labels acknowledge it or not (and over the weekend, a few executives actually did). Without a settlement, the recording industry is in danger of blowing a historic opportunity to protect artists, make money, and capitalize on, rather than shun, the information distribution tools of the future. P.S. Who are the pirates? A record exec e-mails me this a.m. that it cost about 50 cents to make a CD, for which consumers pay $16.95. (Read more).
For several years now, the distribution of free music online has been evolving into a bitter, costly and signficant test of whether new information technologies will change the nature and meaning of copyright, or alter the ways in which culture and ideas have been owned, marketed and distributed. The Net has made possible, for better or worse, the free acquision of music and other kinds of intellectual and creative products.
MP3 technology -- a format which jumped from obscurity to ubiquity in 1999 -- has turned out to be revolutionary. Millions of people whose access to music was previously limited to radio and CDs suddenly had instant and free access to much of the music recorded in modern times. MP3 sparked a cultural and economic revolution that is just beginning to be understood.
An entire generation has grown up seeing the acquisition of music as a right. This generation has a voracious appetite for music, something that should please the makers of it. Industry executives and many artists, of course, see the way they satisfy that appetite as nothing more than a pervasive form of thievery.
A number of artists have bitterly complained that the downloading of music on sites like MP3.com is simply piracy. They have criticized writers like me (with justification) for not highlighting artists' rights as well as those of music lovers. Friday's ruling by a federal judge against MP3 was the clearest and most powerful blow yet struck against the by-now deeply ingrained tradition, especially among younger music lovers, of acquiring vast music libraries for free. MP3.com could face stunning penalties.
At issue is something complicated and important, something not taken into account, or even acknowledged, by the Federal court ruling. There is hardly anyone reading this who hasn't acquired some form of free intellectual property on the Net, from music to text to software. Artists definitely have a right to be paid for their work, but branding a whole generation of music fans thieves seems simplistic, even self-destructive.
The question now becomes political and cultural, as well as legal and technological. Judge Rakoff issued a startlingly brief order Friday holding MP3.com "liable for copyright infringement." The suit, brought by RIAA (The Recording Industry Association of America), a consortium of the world's largest record labels, seeks to shut down MP3.com. But over the weekend, some music industry officials, including Paul Vidich, an executive vice president for Time Warner, said RIAA wasn't trying to put MP3.com out of business as much as force it to change.
The court found that MP3.com had violated copyright law by creating an online database -- MyMP3.com -- of 80,000 major label records. The ruling doesn't affect the use of MP3 compression technology (not owned by MP3.com) to make copies of music via the Net.
It follows a growing number of lawsuits -- some by recording artists like Metallica and Dr Dre -- against Napster. RIAA also has a suit pending against Napster in federal court. MP3.com shares dropped sharply in late Nasdaq trading Friday afternoon.
As strong a victory for the music industry as Judge Rakoff's ruling sounded, it seemed both short-sighted and far from clear cut. MP3 has altered the music industry for good. Shutting down MP3 and Napster would hardly mark the end of the battle.
"The shame here," a dissident, savvy music industry executive said in a phone interview over the weekend, "is that the record labels could have embraced MP3 and Napster, rather than going to war against them. What they don't grasp is that while piracy issues have a lot of validity, Napster constituted a rebellion against monopolistic music industry practices and greed, as well as a copyright problem. Instead of reforming, and grasping a real chance to change, the industry simply used the most heavy-handed method in dealing with these issues. Those of us who know the Net know this ruling will last for about a week. Piracy issues aside, the industry has a full-blown rebellion on their hands. These kids are never going back to the old way of buying music. We need a new system that responds to them and really does protect artists."
There were hopeful signs over the weekend. Danny Goldberg, one of the industry's most enlightened execs, and chief executive of Artemis Records, an independent label that releases CD's and runs Internet radio and music subscription services, said of music-sharing: "It seems counterintuitive, but an increase in free downloads coincided with an increase in paid sales. Particularly among the young audience, the people who are most wired, the evidence is that it's bonding a new generation to music." Goldberg's comments suggest that at least some leaders in the music industry grasp that new transmission technologies could be good both for the music industry and for artists.
History suggests that once new technologies like MP3 and Napster exist, they will be used and replicated. Many music industry executives believe the recording artists would make more money, not less, if they embraced digital music-distribution technologies. When the record labels went after MP3, the industry triggered the Napster rebellion. Napster software, spreading wildly on the Web, allows MP3 users to share files. If suits against Napster are successful, why wouldn't yet another technology crop up? In fact, it already has, in the bumper crop of programs both client and server which basically treat the Internet as a searchable and vast remote filesystem.
Pretending otherwise doesn't protect the rights of artists, it simply sets them up to get ripped off forever, and needlessly politicizes the tradition of free music among younger consumers. Selling music more innovatively just might permit artists to get paid and let consumers keep their new-found ability to acquire more music for less money.
Brian Ploskina of inter@activeWeek.com quoted Gene Hoffman, chief executive of EMusic.com, an online MP3 store and showcase as likening the free music legal battles to prohibition, doomed efforts to restrict the sale of liquor. "In the 20's," he said, people made a lot of bathtub gin, but they don't do that today because they can buy it for $20." His well-taken point is that music-downloaders would probably pay for music too, if the prices were more affordable.
It was an apt analogy. The music industry and the Temperance movement both thought they could legislate the social tastes and desires of millions of Americans. Whether they have merits to their arguments or not, history says their task is impossible. Recent legal actions make it likely that key distribution points for both MP3 and Napster -- particularly universities and other institutions that till recently have allowed music distribution software on their servers -- will be shut down. Others will obviously emerge. The legal actions won't stop the proliferation of music-transmission software, or the epidemic resentment and anger at the way the greedy record labels operate. The music industry is in the odd position of winning one court ruling after another while alienating an entire generation of customers.
For years now, millions of music lovers have been acquiring diverse kinds of music for nothing, making music more popular than ever. In l999, the record industry posted an 8 percent growth in revenue -- from $13.7 billion in l998 to $14.6 billion in l999 -- while the number of audio and video units sold rose from l.12 billion to 1.16 billion, according to RIAA statistics. Many executives believe those numbers would have been higher if the record industry were using MP3 for sales and promotion. Hundreds of music-sharing sites exist all over the Net and Web besides MP3 and Napster, including ones which take advantage of instant-messaging systems and privately-built and run Web sites.
Do recording executives really believe that music fans will suddenly give up on acquiring diverse and numerous forms of music for free and go back to buying a handful of expensive CDs a few times a month? That wouldn't protect artist's rights or those of music lovers. This digital genie isn't going back into the bottle. Successful negotiatioins between MP3.com and the music would be the sanest step yet in the music wars, and a healthy precedent for other businesses who sell intellectual property as well as artists.
Note from timothy: Thanks to twiin and other readers who sent word of Metallica's upcoming online chat tomorrow (2nd May 2000) as part of an ArtistDirect promotion, where you can tell them what you think directly. I quote: "Hold nothing back: this is Metallica, after all. They can take it."