Practical Technology

for practical people.

The RIAA’s billion dollar blunder

February 27th, 2001 · No Comments

As everyone who gives darn about music and technology knows, Napster offered the music industry a billion bucks over the next five years if they would, pretty please with sugar on top, not sue them out of existence. The music business, represented by the Recording Industry Association of America (RIAA) replied, “Hell no!”

Well, actually they used other words, but it doesn’t take an English professor to figure out their real message. There were catcalls saying that Napster’s announcement was only a public relations move, without any business plan merit. But what the recording companies really wanted was nothing less than to put Napster out of business, while whacking turncoat recording publisher and Napster-supporter Bertelsmann along the way.

Of course, the recording industry is right about problems with Napster plans. What they don’t get though, is that it’s also the last, best deal, they’re ever going to see.

The RIAA is acting like Napster, the company, is the enemy. It’s not. It’s also not Napster’s peer-to-peer technology, although that plays a much larger role. The recording industry’s real enemy is its own stuck-in-the-80s attitude. They can’t see that their old business model is dying and that to thrive in the 2000s, they must embrace digital music transfer technology. Peer-to-peer plus the Internet means a musical distribution revolution as big as the shift from LPs to CDs. Heck, what the music biz big shots should be doing is buying into Napster and co-opting it as fast as they can.

Why? It’s simple. Let’s say Napster, the company, goes down for good sometime soon. Will that stop people from trading music on the Net? No, it won’t even stop Napster, the program.

The genie is out of the bottle. Napster-style programs that use non-Napster company registered servers such as Napigator and Opennap Network are already running. Turn off the Napster servers, and the technically adept won’t even notice the switchover. It will take the rest of the Napster user community about two weeks. Similar peer-to-peer file sharing programs like The Freenet Project and Gnutella and its descendents BearShare, Gnotella and LimeWire will also continue to let people trade MP3 files with complete anonymity.

And, listen up RIAA; none of these new programs rely on centralised servers, management or even a company. When no one’s in charge, there’s no one to serve cease and desist orders to, no network of servers to be shut down. Here’s the important part: with no Napster, there’s no one left to make a deal with. Instead, there will be a dozen or more programs thinking around undercutting your old business plan even more effectively than Napster did.

In theory the RIAA companies are trying to create their own tamper-proof music exchange system with the Secure Digital Music Initiative (SDMI). But there’s a bunch of problems with this. First, the RIAA doesn’t really know how to go about implementing such a system. If they did, Napster would have never stood a chance in the first place. Secondly, the secure system will be quickly broken and the songs will soon show up on Opennap and Gnutella. And finally, the companies show few signs of having a business plan to put up their own music network in the first place.

No, all in all, the RIAA would like to pretend that the only way music can be distributed is on tape and CDs. It’s too bad for them those days are as over as the days of 8-track tapes.

What they should be doing is making the new digital music transfer age work for them. And to do that, they need Napster to be healthy, strong and part of their industry. With Napster providing the brand recognition and easily the world’s most popular song trading software, they could make the Napster billions and more. Bertelsmann understands that the music industry is profoundly changing, while the rest of the recording industry big wheels haven’t and that, within less than five years, will spell their doom.

A version of this story was first published in ZDNet.

Tags: Business · DRM · Entertainment · Legal