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"I think we can live in peace, and I think this is fundamentally a service that does not displace record sales. But people in the record industry genuinely believe that record sales have declined as a result of Napster use."

DOWN AT THE DIGITAL CROSSROADS

An In-Depth Interview With Napster CEO Hank Barry

By Simon Glickman

Part One | Part Two | Part Three

It would seem that much of the RIAA's claim of damage is derived from speculation and anecdote, as in, well, these kids say they're not buying CDs anymore since they started using Napster…

I think that's right. I mean, the one that I love the best is the story of the Syracuse record shop owner—this is in their briefs. Basically, there was a storeowner who noticed a "marked decline" in sales, and he implied that Napster was the reason. The RIAA made a big deal about this, but they forgot to mention that he had shifted his store's entire focus from CDs to vinyl and moved his store from a street-level location to a basement location. So his sales went down, and he said it was because of Napster!

I sense some frustration on your part.

Well, what I'm frustrated about is that I think it's good for everybody. I think it's a big win and it's hard to think that and yet be so… I don't appear to have the communication skills to convince the other side of that. I wish I did.

That's for someone else to ultimately determine. Another thing that was not really considered in making those kinds of summary assessments based on record-store owner testimony, is the fact that brick-and-mortar sales in general are down a bit as a result of people buying CDs on line.

Well, that's the thing about their survey that they used; it did not take into account online sales at all. There's a lot of data saying that people who are close to colleges are buying more of their CDs online.

When you became involved in Napster, unlike some of the other dot-com music executives, you had a conciliatory stance from the onset toward the record business and tried talk to people there, educate them about the service and how you thought it could be helpful and so forth. What are some of your experiences in terms of trying to communicate directly with record labels?

I started contacting people on my first day on the job, and my view is that Napster is complementary—it's not contradictory—to the record business. I believe that Napster, in a way, is an amplifier. A great promotional vehicle, a great sampling service for the record companies.

I think we can live in peace, and I think this is fundamentally a service that does not displace record sales. But people in the record industry genuinely believe that record sales have declined as a result of Napster use. We have a fundamental [difference of] opinion, and it's very difficult for either side to convince the other.

Now, the ray of hope is that generally, as people learn more about Napster as they use the service, they see what the use of it is. As people get into it, it really becomes a kind of super-radio sampling thing: They listen to things a couple of times and then they either go buy the record or never listen to it again. The WebNoize survey, which I actually think is right, although it's a college student survey, said that people who have transferred more than 20 files delete 95% of them. We know that, for the most part, Napster use is not about hoarding hundreds of MP3 files; it's about sampling and listening to things and connecting to songs that you haven't heard in a long time.

I found it very interesting to read about and hear stories about how it's become almost a party game for people to gather around the desktop and think of songs that they want to hear.

Yeah. No one has really approached this from a psychological standpoint yet. No one has written a Ph.D. thesis on the sociocultural implications of Napster. It has helped people to connect with music in a way that's really different from anything in the past. And when we asked people to e-mail their senators, we got a great response, which was very gratifying. But the great thing for me is that a lot of people copied me on their e-mails, and some of the stories are just really heart-warming—about how people have been able to hear things that they wouldn't otherwise be able to hear and records that they've been looking for in cut-out bins for 20 years and they're finally able to hear it again. I think that some day, the sociocultural aspects of Napster use will be talked about maybe even more than the lawsuit.

Napster has reached a level in the popular consciousness that is unprecedented in terms of Internet phenomena. What's really interesting is that the music industry is usually pretty good at having its finger on the pulse of what's going on, and this is one rare instance in which much of the industry seems completely tone-deaf to popular sentiment. This was really driven home to me when I realized that Newsweek thought Napster was really cool. They pretty much say so every week.

Newsweek doesn't believe that record industry economics are threatened by Napster, whereas the recording industry does. Did you see that Universal put out 800,000 MP3s of Eminem that they distributed over the Web—and I'm sure some of it showed up on the computers of Napster users—as a promotional vehicle for the Eminem record? I think people do understand the power of it, but I wish I knew the reasoning behind not wanting [consumers] to be able to take advantage of it.

Is there room, given the possibility that you won't get shut down, for some kind of settlement or agreement with the labels? Do you feel there's no call for that?

I think there is. I think Napster is a great amplifier of the recording industry. I think we're absolutely complementary, but I do believe that they genuinely believe that we are not. They believe that we are a substitute for a record sale, as opposed to something that leads to a record sale. Without that commonality of perception, it's very difficult to come to an arrangement. But we do want artists to share in this. We believe the record companies add value, and since my first day on the job, I've been trying to come to some kind of conclusion.

Go To Part Three

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