For six months I've been writing about the Napster phenomenon -- casting a sympathetic eye on the millions of music lovers on the Net who use Napster to trade music files, and a critical one on the record industry's efforts to stop them. And for six months, two questions have persistently filled my e-mail in box from perplexed or outraged readers.
First: Why do so many people think it's OK to break the law and cheat artists out of their income? Second: If I'm so smart, what do I think the record companies should do?
These questions share some unspoken assumptions that are worth noting -- like a belief that the law is always unambiguous and unchangeable, and a notion that the interests of "artists" (creators) and record companies (distributors) are identically aligned. But the people asking the questions are sincere, and they deserve answers.
If the law of the land were always clear and obvious to all, we would need no courts, no judges and no lawyers to interpret it. Intellectual property laws and copyright laws are particularly complex. Even relatively simple and obvious laws, like the 55 mph speed limit, are sometimes routinely ignored by large numbers of otherwise law-abiding citizens. (Clay Shirky's excellent coverage of Napster in Feed first made the speed-limit analogy.) Laws depend on social consensus; when that consensus disappears, in most cases, the law must give way eventually.
The national 55 miles per hour speed limit is no more; it went the way of Prohibition. When millions of people break the law, the law's enforcers have no choice but to either look the other way, leaving an unenforced rule on the books and undermining the rule of law itself -- or to change the law to make it once more congruent with the society's shared beliefs and behavior. (Shakespeare's "Measure for Measure" has some interesting angles on this dilemma.)
This is what we pay our legislators to do and why we have periodic elections to reward or punish them based on how well the laws they create match our desires. But in arcane areas like the application of copyright law to new technologies, the work of legislatures can be distorted by the lobbying efforts of interested parties, leaving us with laws, like the Digital Millennium Copyright Act, that are shaped to suit the demands of large corporations rather than the social consensus.
In the case of Napster, 20 million people or so are now routinely "breaking the law" (if we accept for the moment the music industry's interpretation of copyright law). Yet plainly, they do think it's OK. Why?
For starters, keep in mind one fundamental difference between intellectual property and physical property: If I take your car or house, I prevent you from using and enjoying them. If I copy your Metallica album, you can still listen to it too.
So with MP3 trading ` la Napster, there's no harm to the parties involved in the trade -- it's not a zero-sum transaction. Where before, one party could enjoy the goods, now two can. If there's harm, it is to the copyright holder -- which is why the record companies are now clamoring, Where's our cut of the deal?
The trouble is, right now with Napster, there is no deal. No money is changing hands. A cut of zero is zero. This is a problem for Napster, the company; the moment it tries to charge money for its service or sell ads on its site or "monetize" itself in any way, there's suddenly a "deal" again and a need to cut in the record labels.
But for now, no one is paying for anything. People are giving stuff away -- they're sharing files for free. That's one of the big reasons, I think, that millions of people don't see anything wrong with using Napster. It doesn't feel like theft; it feels like a great big communal swap meet, where anyone can explore the enthusiasms of like-minded fans.
So the record companies step in and say, "It may not feel like theft, but it is theft!" And that's when all the pent-up anger against them comes out, from music lovers who feel they've been ripped off by arbitrary pricing and packaging ("If you want this hit song, you'll have to buy it as part of this bundle of other songs!"), who resent the big record companies for failing to serve eclectic tastes and who wonder why the "creators" whom copyright law is meant to support -- the artists whose work they love -- seem to end up with so little of the proceeds.
At this point, my e-mail correspondents interrupt and say, "C'mon, we all know Napster is just an excuse for people to avoid paying for music!" That's no doubt true for some portion of Napster users, but it hardly tells the whole story.
I think the most common reason people use Napster isn't that they're cheapskates or thieves but that they're impatient and bored. They know that finding and listening to music online can be convenient. They know that the music industry has dragged its heels and blocked ways of offering that convenience -- and Napster has delivered it.
Which brings us to the question of what the music industry should do. There's no question that, if the record companies had spent the last few years in a full-bore effort to deliver their products online in innovative and easy-to-use ways, they wouldn't be in the pickle they're in today. Instead, paralyzed by fears of "giving away" their intellectual property on the Net, they have mostly stood idly by -- while technology evolved to make their worst fears come true.
That's history now. What's a record label to do today? My first advice to the music business today is, accept reality. You may wish that digital technology did not exist and MP3 were a meaningless acronym, but you can't turn back the clock.
Accepting reality means accepting technological changes. Just as technological changes in the past have enabled the music industry to boost its profits (as with the transition from vinyl to CD), changes today almost certainly mean the music industry will have to tighten its belt.
The very first act a smart record company today would take is to lower CD prices. Music is no longer a scarce good; you can't get away with charging high prices forever. And you certainly can't get away with absurd prices for music downloads, like one label's plan to sell individual tracks for $3 and entire downloadable "albums" for $18. (That's a great trick -- "Pay us a few dollars more and we'll give you less!") If you treat the public like suckers, the public will eventually stop giving you business.
Would lower CD prices mean lower profits? Maybe so. Savvy music CEOs today should probably have downsizing plans ready to go. Record companies are middlemen between musicians and audiences, and middlemen tend to have a dwindling role in industries that are being reshaped by the Internet. There's a place for record companies in the world of Net music, but it's different from their current role: The record company will need to retool itself as a service organization -- serving artists on the one hand, who will ultimately abandon the middlemen unless they get better deals, and fans on the other, who still need reliable sources of high-quality music but will readily turn elsewhere if the traditional suppliers fail them.
It shouldn't be impossible for record companies to devise convenient, easy-to-use online services that make their treasuries of music available to listeners at low (but not zero) cost. After all, Napster was invented by a lone 19-year-old. But such services will only work if they view the characteristics of the Net as advantages and opportunities rather than threats. Online music services should allow us to listen to our music from many devices and locations; to sample new music easily; and to see what other fans are listening to, so we can turn one another on to what we love. If the record companies don't provide such services, some 19-year-old will.
The music companies can take their resources today and spend them on lawyers and legal battles with their own customers in a futile effort to preserve their threatened profit margins. Or they can begin the hard but rewarding work of building new businesses around new technologies. It sure looks like they're choosing the former route. If they stick to the narrow turf of copyright law and cede the wider terrain of new technologies and businesses, they may eke out a short-term advantage, but they will ensure their long-term irrelevance.
Copyright law is meant to preserve material incentives for creative work. But no law on the books ever granted absolute protection to today's business models and distribution technologies -- or guaranteed an industry's profit margins in perpetuity.
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