Article: Intellectual Property

by John Dvorak, PC Magazine

http://www.pcmag.com/article2/0,4149,1537393,00.asp

Here is the argument nobody wants to make and the reality nobody wants to face, especially those in the music business. As I write this, the Recording Industry Association of America is announcing another 532 John Doe lawsuits against peer-to-peer file sharers. The RIAA collects the IP addresses of alleged pirates, and with judicial approval, subpoenas ISPs to get the names and addresses of the defendants.

Copy protection schemes, the Digital Millennium Copyright Act, and lawsuits against file sharers are not going to save the music business. In fact, the opposite is true. I'm convinced that the shuttering of the original wide-open Napster almost four years ago was the beginning of the end for the recording industry. This is because Napster was not just an alternative distribution network; it was an alternative sampling system.

What I call the Napster peekaboo model no longer exists in any efficient form. Napster encouraged traders to centralize and make available their collections, so perusing someone else's music library became easy. This was its most important function.

On Napster, people were not just trading songs but engaging in mutual discovery. Nobody felt they were doing much wrong, because they tended to already own the music they were downloading. People downloaded files so that they could, for example, listen to them on the computer or burn personal compilations.

You'd begin downloading songs A B, and C-your favorite songs ever-and you'd see that one other trader had all three of these songs in his or her library. You could then peruse that person's entire collection. You'd notice that the two of you had very similar taste! But wait, you'd find some unknown bands in his or her collection, so you'd download a few new songs and discover another band you liked. The admitted tendency was then to follow up and buy the CD. That's what people said they were doing, and in fact they were. Sales figures for the time bear this out.

So when Napster was active, the music industry was growing. When it was shut down, the business went into a decline. People blame the decline on the economy and random piracy, but the record industry is generally resistant to short economic downturns, and piracy is not universal. The real reason for the decline is that people have no resource for helping them choose what to buy.

The music industry refuses to accept this reality. As one of the forum members at PCmag.com remarked: "The sales lost to piracy are represented by the formula P=W-R, where piracy (P) is calculated by subtracting real sales (R) from wished-for sales (W)."

The value for P is going to keep increasing, because people don't know what to buy in the first place. I know this is true for me. Napster was the last great hope. Radio doesn't do the job anymore. Few stations even back-announce the music, and the playlists are universally mediocre and seldom showcase smart new talent. College stations provide some relief, but inconsistently. Promotional efforts by record companies focus only on a very few big acts. Other methods of discovering new music, such as listening stations at stores, are inefficient and tedious.

The listen-before-you-buy phenomenon was common before 1960, when most music stores had listening booths. It slowly died off during the golden age of AM radio, when the singles business flourished, and AM radio stations competed with each other for the teenage dollar. EP, then albums, then CDs finally took over the industry, and AM radio mutated into talk and news. When the single was killed off, people were left without a music-sampling resource. This was exacerbated by safe, soft-rock programming on FM radio.

Now there is no way to discover new music except as a fluke or via limited word of mouth. Many bands resort to self marketing and zines-small, mostly crummy magazines-to get any promotion. When Napster appeared, the business was about to be saved.

During the rise of Napster, the industry was flourishing and sales were rising, but music-industry bigs focused on Napster-aided piracy. The belief was that sales would rise even faster if Napster were stopped. Nobody ever thought of using it as a market-research tool and promotional channel. Get rid of Napster and everything will be better, the RIAA folks thought. They did, and things got worse. Now it's too late. The scene is in free fall, and for-pay downloading and cheaper CD prices won't help. Napster provided that crucial marketing channel, but the industry blew it.