The Napster Debate

The Napster Debate

1. Background

The Napster software (http://www.napster.com), launched early in 1999, allows internet users to share and download MP3 files directly from any computer connected to the Napster network. The software is used by downloading a client program from the Napster site and then connecting to the network through this software, which allows sharing (uploading and downloading) of MP3 files between all users connected to the network. While Napster does not condone copyright infringement, there is no opportunity in the software to stop this, or for royalties to be paid to artists whose songs are being duplicated for free.

Unlike similar file-sharing applications (Gnutella, Freenet), Napster limits users to uploading/downloading of MP3 files only. These files are compressed wave (.wav) files. The advantage of MP3 files is that they are approximately one-tenth the size of the corresponding .wav file and can be close-to-CD-quality. It is for this reason that many artists, record labels and other music industry stakeholders are concerned by the MP3 file format and applications like Napster that simplify the sharing of copyrighted material.

Other file formats in common use on the Internet are not as threatening to the recording industry; primarily due to the reduced quality of the recording. Real audio (.ra, .rm) files have reduced sound quality (comparable to radio) and are usually streamed over a different protocol, allowing people to listen to songs without having (or being able) to download the source files. Another ''music'' file format common on the internet is the midi format. These files are of no threat to the music industry because the files are not actually a recording of the music; rather a set of instructions to the computer as to what sounds to play (and there is no way to duplicate vocal tracks). This file format is also becoming outdated and being used less and less.

2. Impact

The reaction from recording artists, record labels and other music industry players has been varied, but primarily anti-Napster. The first action to be taken against Napster was by the band Metallica. In April of this year, they sued Napster Inc for copyright infringement. The case was settled out of court when Napster agreed to ban some 300,000 users who had allegedly downloaded Metallica songs. Again in June Napster Inc was sued for copyright infringement by The Recording Industry Association of America (RIAA), a trade group representing the US recording industry, alleging "Napster isÐ'... enabling and encouraging the illegal copying and distribution of copyrighted music". Napster claims that Audio Home Recording Act that permits copying of material for personal use, allows it''s uses to swap MP3s. Napster further claims immunity by defining the company as an ISP under the Digital Millennium Copyright Act. The RIAA unsuccessfully applied to have an injunction to stop Napster''s operations until after the court case in September, so Napster will continue to operate until (and if) the court rules against Napster.

Other artists and record labels (http://www.napster.com/speakout/artists.html and http://www.napster.com/speakout/labels.html) have responded to the advent of Napster and similar applications in a more positive way, embracing the new technology rather than rejecting it. On their website, the Offspring says "MP3 technology and programs such as Napster [are] a vital and necessary means to promote music and foster better relationships with our fans." Interestingly enough, the Offspring''s last album, Americana, was made available online illegally before commercially released, yet it is the band''s best-selling album to date. Furthermore, a number of surveys have proven that Napster users actually buy more CDs, after ''sampling'' the songs online (http://www.theregister.co.uk/content/1/12093.html). It is this issue that is at the core of the RIAA lawsuit, whether Napster and similar applications will mean reduced CD sales. Napster does challenge the traditional distribution of music (CDs, cassettes, vinyl etc) but whether this should be viewed as a threat or simply a new medium to be exploited by the music industry is another issue. Some record labels, most notably Epitaph (http://www.epitaph.com) have partnered with sites like e-music.com to sell full albums and single songs in MP3 format over the web. In this case, the record company has in fact gained a new distribution method, rather than seeing it as the ''enemy''. Of course, in this scenario, the record company still gets a cut of the profits, something that artists'' whose songs are downloaded through Napster don''t get.

The fact that Napster is free and more convenient than visiting a record store makes it an appealing way to get music for consumers. The problem the record companies have is that there is no way of regulating who has access to the information, and hence no way of profiting from it.

Napster also facilitates international distribution for unsigned artists. This also threatens record labels. Previously, without being signed to a record label, an artist simply could not get the exposure to make a living as a musician. With the Internet, sites like mp3.com and Napster, this is now possible.

While Napster does allow music sharing to an extent that could theoretically destroy the retail music industry, stopping Napster will not stop all their problems. Record labels need to see this new technology not as a threat, but as a challenge. They need to come up with ideas to encourage people to buy CDs (multimedia components, attractive artwork, lyrics, picture books etc). Perhaps if they offered better services to their signed artists, fewer artists would want to release their music themselves.

Napster challenges the music industry''s monopoly on distribution. People can now download music for free in their own homes and artists can release their music themselves. In theory, this could mean the end of record labels and other associated companies, and that is why groups like the RIAA are so worried.

3. Possible Solutions

The music industry''s response to Napster is similar to the response to the introduction of cassette tapes and VCRs. Both new technologies allowed people to record and duplicate copyrighted information and at the time, these were seen as threats to the respective