Napster's Ripple Effect

July 29, 2000 -- There’s proof in Napster numbers.

As the possibility of a court-ordered shut down of the online music-sharing service enteredthe realm of probability this week, millions of people scrambled to Napster.com for that one last download. And that, if nothing else, is a sign ofthe times.

Napster is an Internet file-sharing company that exploded onto the college scene last August. By early this year, network administrators from Boston University to Edinburgh University were up in arms, caught in a web of download congestion.

And although some schools banned access tothe site because of online traffic jams, and the Recording Industry Association of America (RIAA) sued Napster last December for copyright infringement, Napster’spopularity did not wane. Its user numbers are estimated inthe millions, and even though their beloved venue faced a shutdown, there are plenty of alternatives should Napster lose its case against the RIAA.

“If you shut down Napster, there are so many peer-to-peer groups in the wings or underground,” says James Isbester, an intellectual property attorney.

Share and Share Alike

Napster works through what is referred to as ahub-and-spoke distribution environment. If you picture itsnamesake wheel, Napster’s Web server is the central hubthat contains a vast inventory of available MP3 files andconnects to spoke-like users who have those media ontheir own computers.

Peer-to-peer environments don’t need a central place like Napster, however. One such program is Gnutella, a free, open-source method of sharing programs.Once you have the Gnutella program on your hard drive,you connect to a fellow Gnutella user through his IPaddress and can exchange media with anyone attached tothat cluster. If you don’t see what you need on that firstaddress, you can switch to a different address to see adifferent set of users/media.

Programmers at Nullsoft, a subsidiary of America Online, briefly loosed Gnutella on the Webback in March for only several hours, but it spreadlike wildfire. And it has been cloned and distributed across theNet by millions of users.

Recently, its numbers have soared even higher. Duringpeak periods of the day, Gnutella software is downloaded1000 to 1500 times per hour, said Jorge Gonzalez, founder ofthe file-sharing portal Zeropaid.

”Everything is pushed underground further andfurther,” said Gonzalez, who is also a Web designer.

If and when Napster goes away, Gonzalez and otherstuned into the Net environment think users will just findanother venue.

Napster’s Building Blocks

The RIAA will continue its battle against the SanMateo, Calif.-based company in the courts, and in a year or two, there will be an outcome.

“There is legal precedence … a very well developed body of copyright law,” says Isbester. “It addresses the, to my view, relatively simple legal case whether the copying done thru Napster is or isn’t legal.”

But then what? Willthe industry keep on suing?

If the courts ultimately rule against Napster, there are other companies cropping up that the record and movie industries will have to contend with as well.

Scour.com has attracted thousands of users to its Internet service, which allows people to download an array of media from music to videos. Just last week, a group of movie studios and record companies sued Scour Inc., alleging copyright infringements.

“The record companies have to realize … in the past they’ve always relied on the difficulty of copying and distributing copyright works to be able to charge the fees that they’ve charged,” says Isbester. “They can’t do that anymore.”

The jury’s still out on whether or not Napsterand companies like it amount to copyright infringement, saysEric Scheirer, media and entertainment analyst withForrester Research, based in Cambridge, Mass.

Following Napster’s Footsteps

But Scheirer says Napster cannot be ignored.

“Certainly any business model that’s going to attractconsumers has to recognize that Napster is around,” saysScheirer, and provide the same content availability, ease of use andflexibility.

“If your service isn’t going to come up to that standard, consumers won’t come,” says Scheirer.

Mcy.com offers subscription packages for Web casts of ’N Sync concerts, for instance, which include things like exclusive behind-the-scenes information and exclusive downloads of pre-released material.

In the future such offerings could include interviews with the band and special live versions of top hits. The list goes on.

Emusic.com has also rolled out subscription services.Its music offerings are very niche oriented at the moment,with a good selection of jazz, punk and alternative rockholdings.

While Scheirer says they’ll have to add moremainstream music in the long run, for $9.95 a month youget free range of the site.

Same Old Song

The Napster case recalls previous lawsuitsthat have tried to quell emerging technology in the name ofcopyrights. In 1976 several Hollywood film studios filedsuit against Sony Corp. over the hot new technology ofthe videocassette recorder.

Sony emerged the winner in the battle, with the Supreme Court ruling that therecording of TV shows at home for personal use is legal. Ten years ago, another lawsuit was filed against Sonyover an even hotter new technology. Digital audio taperecorders meant people could record CDs and retain CDquality. Songwriter Sammy Cahn and four musicpublishing companies filed the class-action lawsuit.

“The Sammy Cahn case … [said] you as an individualcan’t make copies like this,” said intellectual property attorneyJackie Pennino Scheib. “What came out was the audiohome recording act, [which] was a settlement of sorts —the manufacturers of blank tapes would pay a sort ofroyalty to music companies which would be passed ontothe artists.”

So there is historical and legal precedent for the Napster case, and once again the courts willhave to decide how technology, artistry, industry andconsumers will pursue their aims to mutual satisfaction.

“Internet distribution changes the balance of powerbetween record labels and the musicians they work with,”said Scheirer. “Major labels no longer have this monopolypower to wield in contract negotiations with artists. So either major labels are going to have to become more fairin terms of profit-sharing with artists or they’re going tolose the artists.”