Music industry’s case against Napster misses the point

The U.S. music industry is already boasting about how the Napster ruling on Monday is a major victory – how the U.S. appeals court upheld an injunction against the file-swapping service (pending certain modifications) and ordered it to stop letting its users trade copyrighted material. But the industry is wrong, as it has been all along: The music business has been the big loser in the Napster case, and will continue to be the big loser regardless of how the whole affair finally ends – if it ever does.

While the 9th U.S. Circuit Court of Appeals decision didn’t pull the plug on Napster right away, it appears to have set a chain of events in motion that will lead to the demise of the popular digital music-sharing service, or could at least force it to remake itself dramatically. It said that a lower-court injunction against Napster would be upheld, provided the court alters the ban to make it less “broad,” and agreed with the lower court’s finding that Napster could be liable for copyright infringement.

Whether Napster is or isn’t guilty of what the court calls “vicarious infringement” of copyright has yet to be proven in a trial. The appeals court ruling is a response to an earlier decision by District Court judge Marilyn Patel in July: After the record industry argued that Napster’s service was causing it undue harm, Judge Patel handed down an injunction against Napster until the case could proceed to trial.

Like the rest of the music industry’s continuing war against on-line music sharing, however, the case against Napster is a classic case of missing the point, and that’s why the music business is still the big loser. In many ways, Napster is a footnote to the real story, which is how record companies and music publishers have missed the boat when it comes to taking advantage of the potential for digital delivery of music.

So far, the big five record companies who control the Recording Industry Association of America – Sony, Universal, BMG, Time Warner and EMI – have shown that they are a lot better at filing lawsuits and deploying battalions of high-priced law firms than they are at serving the needs of their customers. The time that the big music distributors have devoted to filing briefs might have been better spent coming up with compelling ways of convincing music lovers – which is what Napster users are – to buy their products.

At the moment, if you want a copy of that song that you heard on the radio but feel that using Napster is morally wrong, your only choice is to buy the entire CD for about $20, or to get one of your friends to make you a copy of the song from their CD (which is also technically illegal). For the past two years or more, the record companies have been saying that they plan to make downloading music from their artist catalogue as easy as Napster is – and yet music fans continue to wait, as one clunky and expensive subscription site after another tries and fails to get up and running.

Why haven’t the music companies gotten their act together sooner? Partly because they’re afraid of what might happen if they let “their” music to be distributed on the lawless Internet. In some cases, record companies have prevented artists they represent – such as Tom Petty – from releasing even one song from their CD on the Internet, because of concerns about copying. Music companies are also afraid of eating into their existing revenue stream, and it’s easy to see why: a U.S. trade ruling last year found that CD buyers have been overcharged by billions of dollars.

The Napster ruling is a footnote for other reasons as well, one of which is the fact that there are plenty of other ways of downloading digital music files that are far harder to police than Napster. Some, such as Emusic and, have signed deals with music labels that allow users to download some songs for free and others for a small fee. Others such as Gnutella and Hotline simply provide software that lets users connect to each other (in contrast to Napster, which uses its own servers).

It’s true that the music industry can pursue cases against these other services, as they did against – which filed for bankruptcy protection last year as a result – but that too will miss the point. Not only will it be a lot harder to stamp out services that are based on true peer-to-peer networks, but putting out dozens of little fires will continue to divert the industry’s attention from what it should be focusing on: how to convince an entire generation not to desert the traditional music business, which has so far done everything it can to push them away.

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