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Napster Extends a $1 Billion Olive Branch - The Industry Reacts
And Other Emanations from the Napster Decision...
By Margee Fagelson
(more articles from this author)
2001-02-22
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Napster, Napster, Napster…with all the hubub about Napster going subscription, there have been several other Napsterelevant episodes since the 9th Circuit Court came in with their (however awkward) decision.

Napster, will you be our Valentine?

On Thursday, attorneys for the RIAA and NMPA got antsy. Despite the fact that they'd filed back in December, these two camps joined forces to propose a modified injunction order to Judge Patel, in order to encourage her to get this ball rolling. The order asks that Napster be forced to remove all currently available recordings from transfer, by blocking them in their server. The RIAA and NMPA are prepared to hand over a list of names and titles. Additionally, Napster will be under orders to keep a close eye on the Billboard Hot 100 singles chart, as well as the Billboard Top 200 albums – which are weekly lists.

Now, on the one hand, if what 'we' say is true, this won't put a damper on any of our Napstering pleasure. If what 'we' are looking for on Napster is obscure, out-of-print or new music, then this injunction will only make it easier for us to find what we're looking for. How much more quickly can I find my Rex Smith and Defranco Family without all those U2 and Shelby Lynne files clogging up the search? Those are the kinds of things I used to get from Scour – obscure things like Kidney Thieves and old things like Leif Garrett.

Big Belgian Brother is watching.

Also on Wednesday, it was announced that some places aren't so tolerant as America. In Belgium, police searched the homes of people reported to have been doing the unthinkable. These immoral, base, dangerous perpetrators, armed with a personal computer and internet access were DOWNLOADING MUSIC!!!!!!!!!!! I think all of Europe probably sleeps a little better these days, knowing how brave these police had to be to keep the streets safe for their record-buying children.

The IFPI (International Federation of the Phonographic Industry), which just a few weeks ago helped crack a Russian CD and credit card counterfeit ring, has decided to throw the book at the real criminals. The IFPI is looking to support a tracking software which can immediately identify illegal song-swappers on the internet with the intention of handing the information over to the police.

Adrian Strain is the IFPI's communications director: "We conduct manual searches to find people offering links to pirate songs… We normally send a letter asking them to stop, then a second letter if they ignore the first. The last resort is legal action."

But don't think they won't go there. Turns out that the raid in Belgium were a result of names passed to the police from the Belgian IFPI. The head of the Belgian IFPI admitted that approximately 100 names were submitted to the police. They were identified as Napster users. Be careful where you browse.

We don't want to play in your reindeer games.

Supertracks, a former DRM company, announced a slight detour from their original business model. Perhaps Suptertracks decided the competition out there was too tough – especially with the entrée of Digital World Services (DWS), Napster's DRM (more on that, later) – so they decided to shift gears and go a little more ambitious. On Tuesday, February 20, Supertracks announced their new network concept – Bridgeport. The idea behind Bridgeport is an alternative streaming system and an alternative to Internet radio. Bridgeport stores pre-programmed music downloads onto your hard drive, allowing you to access them in streaming form and only via the Bridgeport proprietary player. The system also (unlike Internet radio, but very much like the way too quiet Echo Networks) allows the user to pick and choose the songs s/he likes thereby resulting in a heavy rotation list skewed to the listeners' own tastes. However, the Bridgeport system will NOT allow the user to organize their own playlist, nor (of course) to share these files. Supertracks prides itself on its cooperation with the Digital Millennium Copyright Act of 1998.

Back to the topic at hand.

Also on Monday, Napster waved a white flag at the major record labels. Napster took a look at their watches, realized it was the eleventh hour and offered to settle – to the tune of One…Billion…Dollars. Anyone else hear Mike Meyers in their head? The RIAA all but laughed in their collective face.

Hank Barry – acting CEO of Napster – announced that Napster would offer to pay the major labels $150 million per year. That's collectively, not individually, by the way, based on the number of songs downloaded per label. He also announced a somewhat smaller offer to the 'independent labels.' Both the NMPA and the RIAA scoffed at the offer, saying it wouldn't even make a dent. Pundits' questions were directed at the vagaries of a statement like 'independent labels.' Which independent labels? Who will be considered independent? And how far will $50 million – spread out among the unknown number – go to 'compensate' already struggling companies. My question is this: if Napster's offer were accepted by the 'indies' then would the 'indies' who support Napster by doing strategic partnerships, co-branded promotions, etc. not be compensated? History will show that it's the rare case indeed when people who give their work away for free, later get any sort of compensation from the recipients of free services and goods. They'll get squat.

Barry also said that equity in Napster might be an additional incentive to the labels. But the way Napster is positioning itself and its service…equity in our once-favorite renegade may be worth about as much as Atomic Pop's employees' stock options.

It's not just a car polish, it's a dessert topping!

'While we're at it,' Napster thought. 'Let's introduce our handy-dandy, super-cool new subscription model for all the world to rebuke!'

Napster is going to a fee-based subscription model. Wow, isn't THAT news. 'Cuz we all sure didn't hear them say that when they took the loan from Bertelsmann. They still haven't confirmed the pricepoints but it should be somewhere between $3 and $10, depending… But that still doesn't answer anyone's problem except the big powers, the RIAA and the NMPA. Sure, they'll get paid. But what about the Aimee Manns, the starving artist and even Metallica?

In the words of Frank Davis, CEO of Chaoskitty. "[The] problem with Napster's offer to the labels is the money goes to the labels. Some pundits have predicted there would also be profits from an equity deal with the cartel. These profits would also go to the labels. On first blush I see nothing in this offer that guarantees any change in the status quo vis a vis artists getting paid. Can anyone offer proof of any artist getting paid from any of the net licensing deals over the last couple of years?"

And what about quality? One of the reasons Napster has no problem with customer satisfaction is that the customer always gets what they pay for. The tracks are mismarked, the sound quality is poor, it takes an hour to get one measly file downloaded from a 56k modem. But if Napster goes legit, they'd also better get official licensing and endorsement from everyone involved. A paying customer is going to expect the best product for their money. If Napster doesn't provide, they'll have some 'splainin' to do.

And that's not all, you also get a year's supply of Turtlewax.

Napster has also outdone itself in changing from Robin Hood to the jailkeepers in 'The Deer Hunter' in the blink of an eye. With the help of Digital World Services, Napster is going to have the most locked up, secure files available publicly. Napster files will be specially encoded as they are transferred from one user to another. This encoding will work with both MP3 files and MS Windows Media files, as the Napster we know and love already works with them. But the encoding or 'transfer management' will also direct how and when each file can be used. Regardless of how much the end user pays for a Napster subscription, they may not be able to do much with the files once they're downloaded. And that includes burning them to a CD, which is currently the most stable way to preserve digital music files anyway.

And who will determine these parameters? Napster. The executive director of marketing for DWS had this to say: "Record companies and publishers will not be able to specify what kind of rules will apply to particular songs or albums. The rules are still being determined."

The director also anticipated that CD-burning could well be completely disallowed, in deference to the labels.

So, the labels have no say in how files can be used or restricted but Napster is doing everything the labels want them to do. Does that mean they are just going to do whatever the labels say, but justify doing it because Napster decided to do it, thereby owning the idea? Sure, information wants to be free and no one can copyright or trademark an idea, but does the very fact that Napster will universally agree with every RIAA and NMPA tenet mean that they are free thinkers or new-found puppets to the cartel?

Frank Davis called it the SDMIzation of Napster: "I listened to panel after panel at the [Future of Music Coalition's Policy conference] proclaiming DRM to be yet another tool of the cartel to continue robbing both the artist and the consumer – not to mention the DMCA issues and potential privacy concerns. Every cartel driven system-implementing DRM has met with intense analytical criticism on this list – even those that have turned out to be vaporware. What makes Napster's DRM any different from the DRM previously floated by the cartel or SDMI? Is it simply because it is Napster? Is it truly a fair and just digital world when the music I get from Napster is bounded (Napster's words not mine) to the Napster system exclusively? Is a truly fair and just digital world one in which Napster can restrict – based on how much I pay them – how I can use the music I get from their system? Isn't this essentially what SDMI was trying to do? Aren't these the same issues pho has criticized the cartel for?"

So Napster, once the music lovers' best friend is now going to more completely impede the acquisition and discovery of new music than any optimist before could have envisioned.

And what will become of us?

Frank Davis: "I do not believe Napster has sold out. I also have no qualms concerning a fee-based Napster. (I did question whether the youth who love Napster will pay.) I believe Napster has made a business decision to further their plans for a subscription service and to maintain their dominance in the digital distribution marketplace by implementing DRM in N2. We (Pho) have been climbing all over the cartel for this very model, way before the February 12th decision. Did you ever really believe music would never be a paid service on the net? The decision changed nothing other than the fact that Napster needed to pay all along - just as HBO has to pay to show those movies that subscribers pay to see (and tape)."

Ain't nuthin' goin' on, but the rent.

John Borland of CNET News suggested on Wednesday that the Napster model was and would be sucking money and time from the ISPs. Maybe they could work it. "At the core of Napster's proposed subscription model is an idea so simple that recording companies should fall all over themselves adopting it: Make other people pay for millions of dollars in costs the labels pick up today….The key problem facing the industry as it seeks to create a sustainable online distribution model [is that] although downloading is considered 'free,' it is anything but – the costs are simply hidden. By taking advantage of the Napster's peer-to-peer model, the record industry could create a subscription service that moves much of the Net's priciest features – network bandwidth and storage costs – to subscribers and their internet service providers."

Not a bad perspective. Some universities – including Stanford – have restricted access to some entertainment services online. This was not done in a protest against copyright infringement but a protest against a strain on their servers and bandwidth. At least one ISP sent a letter of complaint to its users, protesting the traffic jam all this downloading was causing.

On the other hand, Borland points out that a legal Napster subscription might be the best advertisement for high-speed access companies. If nothing else, it might certainly serve as an incentive. For those among us still dialing up, we're gonna want to make damn sure we get our money's worth. RoadRunner, here I come.

Linkography

Billboard - www.billboard.com
Chaoskitty - www.chaoskitty.com
CNET News - www.news.com
Digital World Services - www.dwsco.com
IFPI - www.ifpi.org
Napster - www.napster.com
NMPA - www.nmpa.org
RIAA - www.riaa.com
SDMI - www.sdmi.org
Stanford - www.stanford.edu
Supertracks - www.supertracks.com

Related MusicDish e-Journal Articles:
» The Napster Decision: Where do we go from here? - Alternatives to Napster - Friends of Napster - Enemies of Napster (2001-02-15)
» Napster Takes a Blow, But Problems Still Loom for the Recording Industry (2001-02-12)
» Napster Gains Another Ally in TVT Records (2001-01-29)
» My, Have Times Changed! BMG and Napster in a Partnership? (2000-10-31)
» Wanted: A Survival Plan for the Music Industry - Napster and the Consequences - 'This is the end, my only friend, the end' (2001-01-29)
» Imagine All the People (Sharing All the Music) - A&M Records v. Napster (2000-11-08)
» Story of a Revolution: Napster & the Music Industry (2000-09-06)

Related News from Mi2N:
» IFPI 'disappointed' By Napster Proposal
» Rosen To Napster: Accept Court Decision, Focus On Future
» Napster's Offer To The Major
» A&M Records V Napster Decision
» NAPSTER INC. RESPONSE TO NINTH CIRCUIT COURT OF APPEALS RULING ON THE U.S. DISTRICT COURT INJUNCTION IN A&M INC. V. NAPSTER
» Statement On Napster Court Ruling From Rob Glaser, Chairman And CEO, RealNetworks
» Rosen Statement From Press Conference On 9th Circuit Decision
» Statement By Jay Berman On Today's Napster Decision
» Valenti Statement On Napster Ruling
» Napster Service Continues Rapid Growth, Reports Jupiter Media Metrix


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