March 7 2001

Napster in deep trouble

Napster have made a lot of headlines during the last year, and right now the record companies are closing in on the very popular MP3 search site. A federal judge has ruled that music companies are to list songs they want removed from Napster. Napster has three business days to make sure no one can download the songs via Napster.

"Napster will follow the District Court's order," says Hank Barry, chief executive of Napster.

Napster is a so-called peer to peer search service, meaning that it does not keep the music -- i.e. the MP3 files -- on its own servers. Instead people who have downloaded the software needed to use Napster, keep the MP3 files on their own PCs. If these computers are connected to the Internet, any Napster user may download songs from that computer. What Napster does, is to keep a list of MP3-files available, guiding the Napster users to a relevant computer.

The court order demands that the record companies prove copyright ownership of songs that are accessible through Napster. That should not be too difficult. The five major record companies that have sued Napster over copyright infringment, say they hold the copyright to as much as 70 percent of the music exchanged through Napster. Napster has announced that it will remove listings of protected material, but at the moment it is still possible to download top 40 hits using Napster.

Napster is reported to have 65 million registered users, of whom 10 million use the service daily. More than 2.7 billion files were downloaded in January alone. The music industry argues that the extensive downloading of copyright-protected music is threatening record sales. Napster, on the other hand, argues that no Napster users are earning money on making their MP3 files accessible. Hence the exchange of files is more like making copies for your own or you friends use, which is assumed to be legal.

In various discussions groups on the Net, Napster user have been know to argue that the record companies earn too much anyway, and that the right to download any material on the Net should be protected. Others argue that the access to new music leads people to buy more records. The music industry is, obviously, not amused.

The core of the problem is probably not what the music industry is loosing right know, but rather the consequences of the future technological development in this field. At the moment, downloading MP3 files from the Net is a bit cumbersome. Using a standard phone modem, downloading a song may take up to half an hour, unless the process is interrupted (which can happen quite often).

ISDN, ASDL, cable and various broadband solutions are becoming increasingly common, however, meaning that you may download a song in a couple of minutes. As computers and MP3 players become more and more common, this could spell disaster for record sales. And regardless of what Napster fans are saying, artists and record companies need to sell records in order to finance production and marketing.

On the other hand, the record companies are loosing a lifetime opportunity, as they have not been able to develop an online distribution system of their own. We reckon a lot of Napster users would be willing to pay a certain fee in order to download one of the latest singles: a dollar maybe, but certainly not more than two. Given the reduced production and distribution costs on the Net, a price tag like that should be possible. One will need a file format, however, that cannot be copied again and again.

Napster has tried to get the record companies to agree to a settlement, including a membership plan that should generate $1 billion in payments to the music industry over the next five years. Under the plan, known as "Napster II," the service would charge members $4.95 a month for about 50 downloads or $9.95 a month for unlimited downloads. The offer was not accepted by the record companies.

The attacks of the record companies may lead to the end of Napster. There are other alternatives out there, however, that makes it possible to download MP3 files, like Gnutella and Aimster. Whether these will become as popular as Napster, remains to be seen.

• Judge orders Napster to police trading (Yahoo!)
• Napster agrees to 72-hour deadline (BBC)
• Life Without Napster (MSNBC)
• Napster
• On Gnutella

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