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The Pizzo Files

Napster and MP3: La Revolucion or La Larceny?

by Stephen Pizzo

What happens when an immovable object meets an irresistible force? Well, eventually equilibrium. But that takes awhile and at the moment of contact, it's all sound and fury.

And that's exactly what you have been hearing from the music industry the last couple of months -- especially fury. The powerful recording industry (the immovable object) ran head on into the emerging online digital music revolution (an irresistible force) and all hell broke loose. The recording industry, through its trade organization the Recording Industry Association of American (RIAA) sued two of the key players in the online music business, Napster and MP3.com. At this writing the legal score stands: Recording Industry 2, Freeloaders 0.

What do those on the inside of this fight have to say for themselves? Here we try to give you the kind of flavor and tone that, normally only the reporter working on a story gets. Instead of quoting or paraphrasing our sources for this piece we provide their comments directly as audio. Here we step back and let you draw your own conclusions.

Gary Falcon, who runs a music talent management agency and represents a number of well-known artists said that the time had come for the industry to stand up against what he felt was the hypocrisy of Napster fans:

"If a fan is truly a fan, they support the artist. They don't steal from them. These sites don't support artists." Hear the quote (Click on the audio icon to hear the full quote)

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The rock band Metallica took matters into its own hands two weeks ago. The band hired online consultants PDNet to monitor the Napster service for one weekend in late April. Much to the chagrin of Napster users who assumed they were anonymous, PDNet was able to suck in 335,000 Napster user names, catching individual fans red-handed swapping Metallica tunes that weekend. The band presented the company with 60,000 pages of computer printouts containing the user names and demanded that the company immediately block those users.

Steve Curry of Emusic.com believes the band did the right thing.

"Metallica showed great courage. To go up against Napster which was a very popular trend out there with Metallica fans showed a lot of courage." Hear the quote

But Curry added that the move to downloadable music is understandable and unstoppable.

"A lot of young people have found that downloadable music is a more convenient way to listen and manage their music collections." Hear the quote

The problem, Curry said, is that for the antiquated recording industry all this happened too fast for them to respond and the industry basically panicked.


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"The unfortunate thing is there are only two ways to get downloadable music these days and one is to just go out on the Net and find other people's MP3 files and download it." Hear the quote

Recording industry giants believed, incorrectly Curry says, that if music is made available for downloading online that people will not pay for it, but rather simply steal it. Curry says that Emusic.com has seen a very different reality:

"If you offer music at fair price and have a good collection, people will pay ... the fans recognize that the bands trust their fan base." Hear the quote

Talent agent Gary Falcon agrees but argues that the rate of change on the Net has far outpaced the ability of the legal and ethical systems to keep up. That is why, he says, the RIAA lawsuit against Napster was important.

"Can it be argued that CDs are overpriced? Yes, that argument can be made ... but artists have to play with the big dogs." Hear the quote

And the RIAA suit against MP3.com was also warranted Curry says, because MP3.com clearly stepped over the line.

"The RIAA is saying downloadable music is not necessarily evil ... but ..." Hear the quote

As all this plays out in the courts, the long-term hopes of the recording industry lay in the adoption of what it calls the Secure Digital Music Initiative or SDMI. If accepted by everyone involved -- a big if -- it would establish a set of secure digital standards that would allow copyright holders to decide which recording can and cannot be copied, traded and even how many times they can be listened to. While Emusic.com is a member of the SDMI working group, Curry has misgivings about its future. He says that simplicity and low cost are the keys to consumer acceptance. And, he warns, the recording industry's instincts are to load the SDMI up with complexity:

"What SDMI tries to do is put a bunch of rules, complexity and restrictions on the music. ... Is it just easier to go buy the CD or use Napster and get it illegally?" Hear the quote

Curry said that the reason the recording industry feels it needs so much controls is because they basically fear the digital environment. But, he says, they need to see it for what it really is -- an open door to a new and larger marketplace:

"There are a lot of people in the major label recording industry who view MP3 as a huge threat. ... thatís a negative way to look at it." Hear the quote

The digital music revolution is not about to roll back to accommodate the recording industry's old economy business model, talent agent Gary Falcon warns. Instead, it needs to embrace this new technology and move to business model that allows for lower per-song prices, with the potential for more sales:

"It's difficult at this point to stop it. ... we have to catch up technology-wise." Hear the quote

Falcon compares the current situation to the early days of computers when software was scarce and expensive. In those days, he recalls, people routinely traded copies of programs:

"As the price comes down, the incentive to steal it will become less." Hear the quote

Stephen Pizzo is an award-winning non-fiction author, and newsman for the O'Reilly Network.

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