Digital Music Distribution: Napster Vs. Kazzaa

Over the past decade, since online music distribution networked its way into existence, the digital music forefront has proven to be a precarious foray -- companies have come in and out of the market, utilizing a full spectrum of creative business models in attempts to lasso these newly unleashed possibilities of online music distribution. Some offer distinctly legal solutions that consumers are more or less resistant to and others hover ambiguously over the boundaries of copyright law, attracting users through questionable means. Roxio's Napster 2.0 and Altnet's Kazaa utilize two vastly different business models and, when compared, serve as a good illustration of the contrasting approaches companies use to capture the frontier market of online music distribution. Napster allows major labels to retain their strong grasp on the industry by primarily providing and featuring the product of major labels (and a handful of independents) -- giving the major labels a "virtual extension" of the monopolistic distribution they control in the physical realm. Kazaa attenuates the major labels' grasp on the industry and uses a sponsor-supported "peer-to-peer" application model to allow music suppliers to bypass formal distribution and easily license content through Kazaa's business partner, Altnet. However, the structure of this system undermines the record industry since it allows widespread illegal distribution of unlicensed materials (a.k.a "pirating"). Both Napster and Kazaa, among a plethora of other players, vie to be profitable and stay afloat via different methods in the illusive market of online music distribution.

Napster 2.0 came into existence in late 2003 after Roxio purchased its peer-to-peer predecessor, the original Napster, for roughly five million dollars and Pressplay, an existing online music distributor, for nearly forty million dollars. Roxio sought to combine the highly identifiable Napster name, the infrastructure of Pressplay, and the media services of their own software division to create a multifaceted, superior force in online music distribution . Napster has licensing agreements with the five major record labels, and about 100 independents . Napster 2.0 currently offers a catalog of over 700,000 tracks , spanning all genres of music, and provides users two distinct ways of accessing those tracks. One of those methods is via a subscription model, where users pay a monthly fee of $9.95 to gain unlimited access to all tracks available. However, the user never explicitly "owns" any of the tracks available while exclusively paying for this service. The downloads are tethered meaning he or she only has access to the songs while participating as a subscriber. However, if the user wants to transfer songs to a portable device or "burn" them to a CD, he/she must purchase the tracks at an additional cost of 99 cents each. With subscription, users also gain access to over 50 commercial free Napster-exclusive radio stations.

The other service Napster 2.0 offers is deemed "Napster Light" and offers a pay-as-you-go interface; it gives users access only to tracks they purchase as a portable download. With this service, users do get to "preview" all available tracks with a 30 second low bite-rate sound-clip. All tracks are available for a fixed cost of 99 cents and a limited number of complete albums for only $9.95.

Napster 2.0, both the subscription-based and pay-as-you-go version, is a great service for online consumers who want high quality audio files and the convenience of a one-stop source for their digital music needs, being that Napster has access to so many tracks. Napster offers a catalog containing almost all mainstream acts since the early-era of the recording music industry and a number of acts off the beaten path -- every song one comes across on Napster is guaranteed to be available for quick download. Even if one loses a song he or she has purchased, Napster keeps records of the tracks a user has purchased and makes them available to that user, free of charge, for re-download. Both versions of Napster also offer access to the Billboard charts, Napster's on-line music magazine, Fuzz, and genre-specific feature pages.

If one is not interested in legal access to music on the five major labels or most independents and is more interested in exploring a limited number of lesser known and unsigned talent or distributing his or her own media files then Sharman Network's Kazaa is the application to use. It was launched in early 2002, after the peer-to-peer version of (the original) Napster disintegrated under legal troubles. Kazaa operates under the same basic peer-to-peer premise of the original Napster but is distinct (and legal) for two main reasons: it does not use a central server to hold the files that users are sharing (therefore it is not liable of copyright infringement of unlicensed files) and it offers licensed content distribution through its business partner, Altnet.

Kazaa is a freeware application, supported by advertisements, available to users who wish to exchange files on a peer-to-peer network. Users can choose to share or not to share any or all of the media files contained on their computers--they can easily freely share their own created files. When a user wishes to obtain a media file, he or she can use the search function of the Kazaa application to find other users on the network who possess files that match their search query. A list of results is then generated and the user can engage in a download of the file he or she is interested in; the file is uploaded from the selected user's, (or multiple users') computer and transferred via digital transmission to the downloading user's computer.

However, Kazaa isn't simply a passive entity allowing users to transfer a random assortment of media files they happen to possess; its business partner, Altnet, also allows individuals to contract licensing agreements for formal for-profit distribution of content via the Kazaa network. Parties interested in selling can get a licensed file on Kazaa for as little as $99 . When a seller contracts Kazaa to distribute a media file, the seller sends Altnet the media file and specifies the conditions for download (price, transfer rights, search term association, exc.). Then Altnet encodes it with DRM (digital rights management) technology accordingly, and makes it available on the peer-to-peer network from a central server. When users of Kazaa type in the corresponding search terms, the file is included in the search results -- it actually appears above all the non-licensed results. When the user downloads the file and opens it, he or she is then prompted to purchase the necessary license for the stipulated amount in a pop-up