The Day the Music Industry Died

"Bye bye, Miss American Pie" indeed. At the very least, good riddance to the 60-year-old recording industry that built its fortune printing CD's full of songs like "American Pie" by Don McLean. That, it seems, is the implication of the huge agreement announced on Halloween by Napster and the German giant of the media world, Bertelsmann Music Group. In a nutshell, Napster has agreed to clean up its act and charge users a subscription to download songs by Bertelsmann artists, in return for sharing profits with the German label and its artists. Forget the presidential election, forget the sequencing of the human genome, forget that space station thing. This announcement is the piece of news from the year 2000 that will affect your life most, at least in the next couple of years.

Napster, as everyone knows, is one neat little program. It took a vexing problem--namely, that the record industry didn't want people to be able to download MP3's, so web users had to search clandestinely for them in the unreliable nooks and crannies of the Internet--and fixed it in an ingenious way. Napster created a service in which users bring their own MP3's together, ready to be indexed by Napster, and then share them with each other. No MP3 song has ever gone through one of the company's servers; instead, they're sent directly from one user's PC to another's, in a form of networking called "peer to peer" (P2P) that Napster pioneered.

The recording industry--the same industry that thought the CD was a bad idea--bitterly opposed all this socialist sharing going on and they slapped Napster with the mother of all lawsuits. Because Napster doesn't host song files, it merely facilitates their transmission, Napster had a pretty strong case. But an unsympathetic judge and the prospect of being tied up in court until the Class of '04 graduates made them want to deal. Bertelsmann, recognizing that in the future, music will be downloaded whether they want it to be or not and, knowing that a recording industry not known for its technological savvy wasn't going to get them the digital promised land, decided it had better do a deal too. Not since Nixon went to China has there been a more unlikely meeting of minds.

For Napster's college-student users, this pact means several things. First of all, we can expect that sometime in the next few months, all Bertelsmann content (like Santana and Christina Aguilera) will be pulled from the free Napster service and moved to a premium service. Expect to pay between $10 to $25 a month to subscribe. The rest of the songs on Napster will remain free, which leads us to two possible alternatives. Under the first alternative, the record companies will individually put up their own competing subscription sites, which will be so disastrous for everyone that the record companies will look to today's digital music anarchy with nostalgia. Not only would users have to subscribe (at a similar cost) to five major download sites, but to download a track, say, a new Moby single, they'd have to first figure out which label Moby is on, then register as a paying user at that label's download site. Hardly a good solution to the Napster problem.

The better alternative, the scenario which will unlock the discontinuous powers of the Internet for the distribution of all media, would have all music available through one site, for one low subscription cost. Napster, if it negotiates shrewdly with the music industry, is in the best position to provide this service. Yet, they already may have stumbled in this effort, as the Bertelsmann deal--in an arrangement typical of New Economy partnerships--includes provisions for Bertelsmann to make a significant investment in Napster. While on its face the investment option legitimizes Napster, it could create conflicts of interest for the company down the road. Why, for example, would Warner Music want to play ball with Napster, when it knows that the business it generates for Napster is only making wealthier its arch-enemy Bertelsmann? Clearly, Napster's not out of the hole yet.

For the users of Napster and the customers of the music industry, the stakes are high. The events unfolding now behind courtroom and boardroom doors in California and Germany will be critical in determining whether the music industry can build what Charles Mann has called "the heavenly jukebox." Imagine being able to access the entire library of recorded music--from The Barber of Seville to I'm a Barbie Girl--anywhere, any time and on any device with a speaker and an Internet connection. In the next three years, DSL and cable modems will bring broadband connections as fast as the campus network to the home, democratizing the access to MP3's we've enjoyed on campus for years now. Third-generation cell phones and personal digital assistants will appear with data connections fast enough to allow them to double as digital Walkmans--Walkmans that can be instantly reprogrammed with any song in existence. The era of the shrink-wrapped album with liner notes--and even of traditional pre-programmed radio--may be coming to an end. Chattering radio DJ's and Tower Records, take note.

A final footnote in the Napster story: If Napster is successful in becoming the enabler of the digital jukebox, it will most likely have to abandon the "special sauce" that made it so successful, P2P file sharing. Napster pioneered P2P as a workaround to the objections of the recording industry, which would have rather brought back disco than allow one Metallica track to be downloaded. Now that the industry has (belatedly) jumped on the musical broadband bandwagon, there's no reason for Napster to stay P2P. As users know, MP3's on Napster are often misidentified and of poor quality. If Napster distributed songs off its own servers, which it could do legitimately in the future, it could ensure their quality and reliability. Just months ago P2P seemed an ascendant technology on the mind of every entrepreneur in Silicon Valley; now it appears as just a temporary solution to a sclerotic industry.

So, in a way, the Napster revolution may already be over. Long live the Napster revolution.

Alex F. Rubalcava '02 is a government concentrator in Eliot House.