Napster's Learning Curve

Chabil Ha' writes "CNET News is reporting on Napter's learning curve. There are some interesting revelations about their dealings with the music industry." From the article: "We made one last effort to convince the labels that they should do a deal with us. A little-known underground product called Gnutella had just surfaced. It was a P2P file-sharing program that required no central server and no company to operate it. If the labels didn't do a deal with us, and instead put us out of business, then Gnutella and its derivatives would become unstoppable. If we worked together now we could convert the market to a paid-subscription model. If we didn't do a deal, chaos would ensue. The labels didn't believe us and didn't really understand what this Gnutella threat was."

Comments

Old Napster is STILL the model...

[voss]

The record industry still hasnt rapped its arms around paid download services...try finding one paid service that has ALL of the music companies collections. I dont mind PAYING for the songs if I can actually find them.

The right service would be one that has all the music companies collections and has a mix of paid and free song files.

$0.99 per song

[kihjin]

Digital downloads could be much more profitable than CDs.

Really? More profitable? This wouldn't have to do with the fact that digitally distributed music being more expensive than tranditional optical media. With individual songs at $0.99 and rising, you'd have to be an RIAA executive to think that it wasn't protifable enough as it is.

Re:$0.99 per song

[ciroknight]

Even if you dropped the price to $0.10/song, online music sales are more profittable. Why? Because 1) you don't have to distribute media, 2) you don't have to have the infrastructure to generate that media, 3) you don't have to have the infrastructure to transport that media, and lastly, 4) every song distributed after the bandwidth cost, server maintainance, etc. is factored in, is pure profit. With a digital model, you can spend a few million a year keeping your servers running (bandwidth, power, etc), and eliminate that fixed cost of having to burn a disk to distribute. Also, since users are only buying the songs they want, they're happier, and more likely to come back to you to buy again.

The want for the rise of the cost of a single song is mainly to do with Apple. Apple's profits have skyrocketed, mainly as iPod sales have given the company a leg to stand on again. Since the iPod is only a music player (heh), the music companies want a slice of the profits made on it, and they'll give a reason like "the iPod promotes piracy with its massive harddrive sizes". Whether or not its true, they're using it to try to manipulate Apple.

Digitally distributed music is also less expensive to buy and own than traditional optical music. In my CD collection, my songs have an average of 12 songs (rounded up). 12 * .99 = $11.88, which is cheaper than the $13-20 dollars they'll try to extort from you at Best Buy. Of course, some will argue "well you have to back up digitally purchased songs, so you have to factor in that cost"; well, you should be backing up your media anyways, so you should add that cost to both the CD from the store and the CD online.

In just about every way, digital media makes sense. Of course, people will still want the real deal, and that's good for them, they can keep paying the RIAA's overinflated prices. Me, I'll stick with iTunes.

Frog in the well syndrome

[vivin]

Well the recording-industry is, and has been suffering from a frog-in-the-well syndrome for a long time. Instead of trying to figure out disruptive technology, and how they can adapt/enhance their business model, they try to threaten it or squash it out of existence.

Like the article said, the RIAA's biggest mistake was trying to "cure" the symptoms and not the cause(s). So they went after Napster, but they failed to (to use a cliche) see which way the wind was blowing. They should have seen what was coming with napster - how P2P would be a major force to reckon with. Instead of seeing how they could use P2P to their advantage, they decided they wanted to crush it altogether.

How successful have they been at treating the symptoms? Now what exactly are the causes? Firstly I think it's the completely shitty kind of music that they churn out - the factory made, cookie-cutter style crap. I understand the whole deal about trying to make money for their shareholders, but seriously - a lot of the music is crap (which is why I try to support local bands and listen to indie stuff). A CD may have 1 or 2 good songs, but then you have to buy all the other 10 songs that come with it, and that you may not like as much. Clearly this wasn't good enough for them, because they want you to buy it all.

I wonder how different the entire scene would have been if they RIAA had seen the changes happening and adopted a model that we see today - where they can charge per song.

But like I said... frog in the well.

Pointless

[obli]

Trying to kill off P2P is like squeezing a blob of jelly, it just pours out between your fingers and reassembles after a while...

Re:A question for this topic

[toddbu]

Agreed. But it's still human nature. In my soc class in college, they had an experiment where they'd arbitrarily break up a class into three groups: rich, middle class, and poor. According to these rules, the rich were virtually omnipotent and could make any rule they wanted. The poor had to suck it up. It was interesting to see that even in a room full of (in reality) middle to upper class kids how illegal behaviors quickly set in. In one class, the "poor" kids actually kidnapped a "rich" girl and held her down the hall for ransom.

I'm not trying to justify anything here. It's just that you have to consider how people will react regardless of the law. Our jails are full of people convicted for the possession and use of illegal drugs. Does this mean that we're winning the war on drugs?

Still working on it? Yup, and a long way to go.

[Ahnteis]

Let's see -- I can:

1) Buy music from itunes. It will be in a format that only Apple players can play, will have digital restrictions, and will be at lower bitrate then some competitors. It will cost the nearly the same as the full CD if I buy the album ($14 at Walmart vs $10 on itunes).

2) Buy music from other server. It will be in a format that can play on many players, but not on the popular Apple players. It will have digital restrictions. Quality may be greater then the Apple offering (depending on the store.) It will cost the nearly the same as the full CD if I buy the album ($14 at Walmart vs $10 online).

3) Buy music on CD. I get great quality at a slightly higher cost, but I have to buy all the songs on a CD. I also have to travel to the store instead of sitting at home (or work). I do get artwork and physical media, but have no backup unless I make my own. Increasingly, I may be faced with attempts to block me from making a backup or traveling copy.

4) Buy the music from a Russian site. Incredibly low price, selection of different bitrates. Artists probably won't be paid, but the RIAA won't either. Won't be sued by RIAA for illegally downloading. Morally not quite as "right" as other options.

5) Download the music for FREE through kazaa / etc. Quality ranges, but I will likely have to hunt for a real copy of popular songs. I risk being sued by the RIAA. Morally, one of the least "right" choices.

6) Steal the CD from a store. All the benefits of a CD without the cost. Unless you get caught. Still, you will may very well be penalized less if you get caught then if you had downloaded the song from kazaa. Morally a "wrong" choice.

7) Make a copy from a friend. Quality ranges depending on your friends original source, but it's free and may be legal under home taping laws. Morally questionable.

Of course, the RIAA isn't interested in choices. They're only interested in money and that's why this article is interesting. As far as I know it's not even a dupe! +1 intersting for Slashdot!

Glad To See This

[szyzyg]

There were many companies that wanted to sell music the way ITMS does, I remember going to a party in SF with about 10 different companies - including Napster - all wanting to sell music online. Of course, the record business didn't budge and all these companies bit the dust. Napster of course was a latecomer it started out in not so legal forma and tried to become legal, so it's understandable that perhaps the record business didn't want to deal with them, but there were many other companies who didn't have the legal baggage who were stonewalled by the record business.

Which is why it pisses me off immensely that people described ITMS as 'innovative' when it appeared, elsewhere taleneted developers had innovated and built all the technology several times over.

Re:Still working on it? Yup, and a long way to go.

[Tim C]

It is morally questionable. If that highschool kid likes his buddy's album that much, he really ought to pay the asking price for it. That's the morally right thing to do - compensate the creator for the time and effort spent creating it.