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

A question for this topic

[Anonymous Coward]

How many justifications of piracy will be posted?

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?

Re:A question for this topic

[hunterx11]

Justification is pretty irrelevant to the record industries. However, they are facing an economic problem, and rather than being willing to set aside any outdated notions they have about the nature of their product, they would rather remain oblivious to it at their own expense. If you don't want people to do something, banning it is a pretty ineffective way to stop them compared to offering them an incentive to do otherwise. Even if the RIAA were to use far more Draconian measures than they do today in order to combat piracy, it would have only a marginal effect compared to a more rational attempt to corner the online music business. Yet observe that even today they regard something as successful as the iTunes Music Store with suspicion and contempt.

Ironically enough, the problem here is that the RIAA is putting principles before profit. But their goal is not to maximize profit, but to minimize risk and perpetuate the status quo, even when such things are impossible.

Re:A question for this topic

[DigitalReverend]

You are correct. The Record companies keep the lion's share from CD sales, the artists get diddly squat. I think the current rate depending on the band is anyone from $.02 - $.13 per CD sold. A band, group, artists real income comes from concerts and merchanising.

bt

[ajdlinux]

And now we have BitTorrent! It doesn't really matter what the labels do, P2P won't go away.

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.

Re:Old Napster is STILL the model...

[macdaddy357]

Just a minizzle. He said rapped, he meant rapped. Word to yo mutha! fo shizzle.

Lessons learned...

[max99ted]

...from the article seem to be what the RIAA and the rest of the music industry should be looking at now. For example:

Understand who your customer is, what problems you need to solve, and how much they are willing to pay for it.

I guess they know who, just not the what, where, when, why, and how.

$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.

Re:$0.99 per song

[Psiolent]

But with the ability of the customers to buy individual songs at their discretion, the labels can no longer force them to also pay for 10 crap songs that they don't want to hear. Ever.

However, perhaps with the added freedom customers would be a bit more agog in their music purchases, making up for the loss in revenue and perhaps then some.

Who can say? I am not an economist.

Napster Creaters Take Too Much Blame

[RUFFyamahaRYDER]

Wow, the Napster creaters take a lot of blame for this, and I agree they are partly at fault with the failure of Napster. The part I do not agree with is them taking all the blame.

The RIAA had a chance to cut a deal with Napster and look ahead to what millions of users already knew about the future of aquiring music, but they decided to sue instead. They had a chance to grab the online industry just as it was starting, but instead took the wrong route and now look at them... Sueing anyone and everyone because they still haven't figured out that they can sell MP3's for cheaper than CD's and turn a BIGGER profit.

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.

Re:Frog in the well syndrome

[The Cydonian]

Heh, it's a literal translation of a beautiful Sanskrit expression, kuupasthamanDuukaM.

Essentially, it's an allegory on paradigms that limit your view; just as a frog in a certain well might think that the well is the entire world and makes its decisions on that basis, RIAA companies base their decisions on the assumption that CD's are the only medium that can, or should, survive.

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:Pointless

[TCQuad]

reassembles after a while...

Exactly what kind of jelly do you buy?

To say it succinctly

[vivin]

Understand who your customer is, what problems you need to solve, and how much they are willing to pay for it.

Ohhh! But No! The way the RIAA works now is:

Have your customers understand you, what problems (ooh!! P2P!! PIRACY!!) you need to have them solve for you, and how much you can make pay for it

From what I've seen, the RIAA hasn't been about understanding their customers. At all.

Pioneers in a new industry

[glaqua]

Napster was clearly the pioneer in the music download business.
And they clearly forgot the old saying:
"How do you identify the pioneers? They are the ones with arrows in their backs!"

Misquote

[Gothmolly]

What you meant to say, was:

The more you tighten your definition of Fair Use, the more content will slip through your fingers.
(Leia to Vader)

Re:Misquote

[trurl7]

Misattribution:

The original quoate is said by Leia to Moff Tarkin.

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!

Re:OK?

[uncoveror]

The recording industry's M.O. is simple: rip off children by selling them pieces of plastic at an obscene markup. They aren't interested in changing that in any way. Let them join other obsolete industries in the dustbin of history. Don't buy CDs.

Which is why...

[Belial6]

Which is why we all need to start refering to the act of making and supporting 100 year copyrights as "Child Molestation". That way, in 200 years, our decendents can find 200 year old references to our copyrights system that legitimizes calling RIAA type organizations "Child Molesters". I don't say this tounge in cheek. If someone using an unfair comparison a very long time ago legitimizes its use in our language. (which is not totally unreasonable) Then we must keep in mind that someone must coin the term. So, I hereby coin the term "Child Molester" to refer to companies that rape our inner child by abusing copyright/patant/trademark systems.

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

[Seumas]

#7 is morally questionable? Sounds like the RIAA and MPAA are making the impression they've been wanting to make. That people would even consider two highschool buddies going home and making a copy of one's album for the other to use as being "morallyh questionable" is very sad. We might as well not even have a fair use / home copying law.

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

[slavemowgli]

You forgot:

3b) Order a CD online. If you look around for a bit, you'll probably get it for less than what you'd pay in a store (although that may be offset by shipping costs); you don't have to get up from your comfy chair to buy it, and if you buy it used on eBay or so, chances are that it'll be even cheaper - and also, the RIAA won't get a share of this particular sale (they already did when the original owner bought it), so you also can feel comfortable that you're not supporting them financially.

Also, with regard to 7), whether it's morally questionable or not depends on where you're from. In many places, you pay extra fees whenever you buy a disc or a blank CD-R, supposed to compensate copyright holders for the losses from private copying, but in those cases, it's not morally questionable anymore - they are getting compensated, and that fact actually gives you a (moral, if not legal) right to copy CDs from your friends, too. So, if you know someone in Canada, for example, why not ask them to mail copies of their CDs to you? They already paid for the right to do that, so it should be safe both legally and morally.

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.

[Seumas]

I think I missed that part of the law. Where in the home recording / fair use act does it state that "if you really really like it lots and lots" comes into it?

The simple fact is, sharing music is not the same as piracy. Copying some songs for and from friends is not the same as running a major bootleg operation where I duplicate movies and albums and repackage them and sell them for a profit as a business.

I'm pretty sure a good three generations of kids (and adults for that matter) had no problem copying albums for each other and it was never breaking the law and nobody ever felt there was some moral dilemma there.

So by your logic, if someone really really liked a book they read at the library, they are MORALLY OBLIGATED to send the $50 to the author as just-compensation?

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

[kesuki]

It is morally questionable.

no, no, It's not. Sharing information is not 'morally questionable.' if 'makign a dub' is morally questionable then 'borrowing ait for a week' is a morally questionable. if 'borrowing for a week' is morally questionable then playing it over speakers, in a non sound proof room, while people other than the 'purchaser' are present is 'morally questionable' i'm afraid not. Sharing information is not a morally questionable act. Quite clearly the information was being shared BECAUSE that Is what ONE DOES with information.

however, a person who only 'obtains' information without ever comensating anyone Is morally questionable. The process of sharing the information is not, it is the complete disreguard for recompensation that is in fact morally questionable. the fact that the information was shared is not the problem, the probme is that joe luser who obtained his information via data sharing refused to 'ever' monitarily recompensate anyone involved in marketing or producing of making that information available. But say you know this Joe Luser personally, and you know that he Is not such a morally objectional guy, but that he rather prefers to support artist by Going To Concerts. so Knowing that he's recompnosating artists, you Share Information with him, in the hopes that he will someday go to a concert by the 'band' whom you 'shared' the cd of with joe. the logic is a bit 'optimistic, and slightly dubious, but not so morally objectionable as say, knowing for a fact that Joe is a Selfish bastard who could care less, and just wants something for nothing, and will only ever spend his money benefiting himself maximally and other people to the very least possible.

But then every joe luser who chooses to shop at wal-mart instead of some other store with a slightly 'better' track record is guilty of that, so if you're gonna make that a 'morally objectional' crime you're going to have to shut down one hell of a lot of wal-marts.

didn't think of that did you?

Sharing The Pie

[rossz]

The music industry has had it their way for so long that they simply can not grasp the concept of sharing the piece of the pie, even if it's a huge ass pie. They want it all.

To put it simply for the record executes (who are too stupid to understand basic math): you can have all of this lovely McDonalds hot apple pie (contents may be hot), or you can have half of this full-sized, deep-dish apple pie.

The record executives will, of course, take the McDonalds pie and sue the bakery out of existence.

Re:Power to the indy

[Alioth]

The classic question for bands choosing the DIY vs. record deal route (assuming they have the required talent and luck to make this choice) is "do I want most of a really tiny pie, or a little bit of a potentially very fucking huge pie?". Another way of looking at it is whether you want to sink $10K of your own money into recording, engineering, producing, promoting and selling your CD (and hoping that you sell enough to make back your investment so that you can actually make some cash), or getting a record company to spend $100K of their money (and hoping that they sell enough to make back their investment so you can actually make some cash).

Ah. I see where you've gone wrong, and it probably suckers most artists too. It's actually a choice of sinking $10K of your own money into a recording et al., or getting a record company to sink $100K of your own money into the recording with the hope you make enough cash to actually pay it back. (And you lose your rights to your own work). Record companies don't give you studio time - they lend you money so you can pay for it yourselves, often at an inflated rate. They call it an 'advance', but you still must pay it back, so you probably won't actually start earning money until you've sold over 1 million CDs.