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"If their model is static, if the music is free and they’re only using it for an IPO, well fuck them, clearly."
—Manager Jim Guerinot, to Salon.com
NAPSTER CASE LEAVES INDUSTRY SLEEPLESS
Will Judgment Drop The Bomb On The Biz?

March 27, 2000

The nail-biting continues.

Despite expectation to the contrary, no summary judgement was issued Monday (3/27) in San Francisco in the case of the Recording Industry Association of America vs. Napster.

The anticipated decision--the result of the first of two landmark hearings that will directly affect the future of the music industry--was delayed as the judge decided not to rule from the bench.

Napster, the widely popular music-sharing software program founded by 19-year-old Shawn Fanning, allows users to download its free software, indexes MP3 music files on the users’ hard drives, and makes them visible to other Napster users when connected to the Internet. From there, all it takes is a title or artist search to find other users from whom to download MP3 files. Users may typically find the latest hits through the free network, allowing them to download, burn their own CDs and listen to the music without paying.

It's driving the RIAA and its membership batty.

However, the technology is already out there--and because there are numerous Napster-like programs popping up weekly on the Internet, enforcing any law against the software is well-nigh impossible. Furthermore, any acts of piracy that might take place are the responsibility of Napster users, not Napster itself.

The RIAA lawsuit against the online startup seeks damages of up to $100,000 for each copyright-protected song swapped. Napster contends a law would be unenforceable, since they have no way to track what songs are traded – much less how many – with their software. One thing is certain though: Upwards of a million users tap into the service daily to find everything from Santana’s latest to some unknown entity in Boise.

The program has become so popular on college campuses across the country – students are known to leave it running all night long gathering hundreds of music files and eating up campus Net connections – that schools have had to cut off access to the software.

The company changed the inner working of its software after it was banned by "hundreds" of universities for clogging up campus networks. A collaboration between Napster and Indiana University technicians resulted in a new way of downloading files using the public network only as a last resort and preventing network overload.

And to appease the major labels, Napster is introducing a new version of its file-sharing program, tentatively scheduled for release during the second week of April. The new Napster will allow users to trade secure Windows Media Audio files in addition to unprotected MP3 files.

Protected files transferred through the new Napster program would retain their security features. Some protected music files can only be played for a certain number of days; others won’t play unless the user has purchased them, which puts a security key on the user’s computer. (That security feature can be removed with a hack program currently in circulation, however.)

From the beginning, Napster’s strategy has been to play nice with the record companies, and to that end, the digital-music enterprise is trying to work out a deal with the majors that will benefit all concerned.

Most coverage of this issue has focused on the battle between the record companies (or the RIAA) and Napster, rarely taking the artist into consideration. And artists who have become familiar with the software are lining up on each side of the debate.

Artist manager Ron Stone, who has voiced his opposition to the technology, has set up an ad campaign titled Artists Against Piracy to run on television, radio and the Internet.

"Artists don’t want to get involved in the RIAA’s dispute with Napster," Stone told Salon.com. "They want to take the high road and say, if you care about us, and music is of value to you, then you shouldn’t take it for free. It’s stealing from artists, and that connection needs to be made."

Traditionally, it has been taboo for artists to speak out concerning the business side of music. The fear has been that the buying public, as well as other artists, would perceive this concern as greed, and that the artists’ sole purpose for creating was money. This perception has silenced many artists concerning MP3.com and Napster.

This concern must be taken into consideration by Napster as it develops a business model. In order for Napster to be successful, it is going to need the support from the artist community – both new and established acts.

"It’s a facainating technology that’s captured the youthful customer," said artist manager Jim Guerinot to Salon.com. "I think there’s something there that’s worth talking about. If there is a way to secure e-mail (of users), to create an online digital fan club, that could be cool. If their model is static, if the music is free and they’re only using it for an IPO, well fuck them, clearly. Their business now is not something that’s equitable or workable in the long term."

Even so, other tech companies are introducing Napster-like programs at a high rate. Following in the Napster tradition, a new program has been posted on the Internet that transforms a popular music-trading network into a full-blown online swap meet capable of trading videos and software. Wrapster, has been available for downloading since last week. It allows any kind of file to be listed and traded over the Napster network, which was designed to recognize only MP3 music files.

The trend is bad news for record companies, movie studios and software companies that have fought hard to keep their wares from being pirated online. Programs such as Wrapster and Nullsoft’s Gnutella, which mimic and expand on Napster, are quickly speeding the erosion of copyright protections online, leaving copyright holders scrambling to keep up.

A less well-known program dubbed iMesh allows people to swap music, video and other multimedia files—providing a broader range of options than Napster itself, which only supports MP3 files, but falls short of the capabilities of the new Wrapster technique. The software has also spawned imitators offering expanded features.

The movie and software industries are watching the RIAA’s experience closely, aware that they’ll ultimately be subjected to the same pressure. They don’t face the same risk of widespread piracy today, because high-speed Internet connections still aren’t common enough to make numerous downloads of their products feasible. But a new application called DivX (no relation to the betamax of DVD) is already being called "the MP3 of movies."

We're working on a venture that should make music and film execs feel better--downloadable Xanax.

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