Six months ago, anyone with even a casual interest in technology could hardly avoid Napster. News of the company had bounced from the business pages to the front page as the so-called digital music revolution became a cultural phenomenon.
This was a compelling narrative: the story of a 19-year-old college student who developed a disarmingly simple piece of software that, by making music free, threatened to strip musicians and their sponsors of money, and possibly even topple the music industry with a grassroots revolution.
Six months on and the quick-striking digital music insurgency has become a prolonged, trench-to-trench, slug-it-out ground war of attrition. Napster last week disabled all but the very latest versions of its software, which now contains technology to protect copyright material, which effectively ends the entertainment free-for-all. Indeed, as Online went to press this week, Napster had been completely disabled for two days by server problems caused by the new technology.
Meanwhile, behind the scenes, a dizzying array of competing alliances has formed, each promoting different technological systems, with different ways of earning revenue and protecting copyright, and offering different libraries of music. Each of the original insurgents - Napster, Aimster, MP3.com, Scour - has been defanged, purchased or otherwise co-opted by the Big Five (Sony, Vivendi-Universal, BMG, EMI and AOL TimeWarner) that the spirited proponents of the revolution once scorned. Web surfers - who as late as January saw hope, victory and free music forever within their reach - are now beating a hasty retreat.
According to Johnny Deep, the founder of the Napster lookalike Aimster, the lesson is simple: innovation in the entertainment business is prohibited without recording industry support.
"There is now a climate of oppression among inventors, who are unable to market, fund or even freely distribute their work," he says.
The record labels, long criticised for stalling on their own initiatives in favour of simply eradicating Napster's threat to their monopolies of creation, manufacture and distribution, are set to launch three competing systems by the end of the year. These will be in conjunction with major online companies such as Yahoo!, Microsoft and Real Networks. Meanwhile interlopers, such as the music channel MTV, are developing their own platforms.
Sony and Vivendi-Universal formed Duet, a music delivery service, in February. Duet was rechristened PressPlay two weeks ago and has a deal with the portal Yahoo!.
Universal bought Emusic, an online subscription music service, for $23m in April, and bought MP3.com, the digital locker service where users could store CDs they bought online, for $372m in May. Before the deal, MP3.com had lost its own court battle, signed deals with the Big Five and turned itself into a pay-for-play service.
Along with Napster, BMG also bought MyPlay, another online music locker service, for $30m in May. Its lockers remain free, but MyPlay will be assimilated by the BMG collective, which now includes the online retailer CDNow. BMG, AOL Time Warner and EMI joined with Real Networks, makers of the Real Player, to form Music Net in April. Music Net will deliver music to Napster.
AOL Time Warner, owner of the Warners-Electra-Atlantic labels, has plans to distribute music through its own AOL and cable services.
Currently all the services can stream music via radio-style playlists, but none has taken the step of offering downloads. Under current plans, there will not be one site with music from all Big Five catalogues. Initially, Music Net was going to be the wholesaler for three of the Big Five, then PressPlay, but now a single service for all music from all labels in every genre looks a remote prospect.
"It is not clear that any service is going to play an aggretory role," says Eric Scheirer of US media analyst firm, Forrester Research. "Such a service needs to evolve for the industry to be successful. We need to have some middleman emerge that's not related to any of them if we are going to achieve a successful download or subscription market."
Under the new Napster model to be launched later this summer, users will pay a regular monthly fee, and then an additional fee to be able to access the MusicNet centralised server to download licensed material from BMG, EMI and Warner Music.
But Napster has already lost so much of its customer base and is so strongly associated with free-wheeling piracy that many wonder if it can survive as a paid-for service. A year ago, the network had 50m registered users. In February 16.9m were actively trading. That figure is now down 90%. The research firm Webnoize says 360m files were shared in May compared with 2.8bn in February.
A series of deals - with BMG, MusicNet and last week's agreement to distribute music from more than 150 independent European labels - may not be enough to restore the company's fortunes. Napster also still has to jump some serious legal hurdles to guarantee its future. It still faces a trial over copyright infringement that could result in huge damages.
Some music executives criticised the European label deal as a publicity stunt. "This deal brings Napster bulk but I'm not sure it is attractive to consumers. Not many of the songs that were on Napster at its height came from those labels, so why would users suddenly want to pay for them?" said one major label executive.
Moreover, hurdles need to be overcome before customers can download Barry Adamson, Stereophonics, Moby or hundreds of other independent label artists. "This alliance with the Association of Independent Music does not allow them to distribute music because they have to have the music publishing relationships as well," says Scheirer. "I think it is unlikely that Napster is ever going to re-emerge as a player in the consumer marketplace."
Still, evidence is emerging that the recording industry may have done itself more harm than good crushing Napster and then trying to rebuild it in its own image. Record sales are down 5% to 10% this year compared with the same period a year ago. Weak record releases? The end of the boy-band boom? The incipient recession? Or did Napster promote sales?
"Exposure over the internet prior to a record's release increases sales," argues Hank Barry, Napster's chief executive."They listen to it, they like it, they go and buy it. Napster users are the record industry's best customers.
Although the new systems have yet to be tested on the public, analysts say that consumers are not going to like them. Most models call for limited downloads, files with expiration dates or music that cannot be copied from the PC that downloaded it. Will consumers pay for music that they cannot put on an MP3 player, trade or burn on to a CD?
The Byzantine way the record industry is structured presents considerable difficulties. In short, some music is more expensive than others. Record companies would clearly like to charge more for, say, Michael Jackson's upcoming efforts, than for a back catalogue recording of Archie Bell and the Drells.
If record companies make all of their music, new and old, available in the online marketplace, the laws of supply and demand ensure that each song becomes worthless. And record companies, because of complicated pricing structures and contracts with composers and performers, cannot afford to slash per song costs just to make more music available.
"It is all bad news for consumers," says Lee Black, director of research for Webnoize. "The Big Five is trying to force business models on consumers that they are not willing to adopt. And by doing so, it is going to continue to force consumers to move to piracy for music."
Moreover, the subscription model that the systems are likely to adopt allows unlimited usage of songs only so long as a subscription is maintained. Supporters of this system say it is like renting a video - you can play it as much as you want over the rental period and then, if you like it enough, rent it repeatedly or buy it outright.
"The important thing is that there is not going to be one service that is successful. It is likely to be a marketplace of different opportunites, different packaging, different rules, different prices and different customers," says Schierer. "The real difference is whether users can or cannot choose what piece of music will play next."
But the music industry is almost certain to succeed. What is also clear is that the age of the free-wheeling internet music companies, like the free-wheeling inter net itself, is past. Once the Big Five get to grips with consumers' needs and fashion systems that cater to them, there will be little need for the MP3.coms or the Gnutellas that have skyrocketed in popularity in Napster's wake.
"There is no place for a small company to pull off a monster vision in digital music," says MP3.com's chief executive Michael Robertson.
"If you are making a tiny widget that is a bolt-on feature for listening to music, fine - that can be a small company. But if you want to be the grand vision, the place where everyone stores their music and listens to it wherever they go, that is a big undertaking and a small company cannot do that. All the small to medium companies are going away. The window of opportunity is over."
File-sharing alternatives
The new generation of P2P (peer to peer) software products handles video, picture files and MP3s. But, asks Mike Anderiesz, are any of them as good as the original Napster?
Bearshare
www.bearshare.com is one of the most popular P2P products and captures some of Napster's community spirit. There is little option to define your search and its search engine is slow. The majority of attempted downloads failed.
LimeWire
www.limewire.com is the second most popular. The interface allows multiple simultaneous searches. Download options such as minimum speed are easy to control. Searching for video yielded poor returns, but music content was good. Successful downloadshave improved although it is still not good enough.
KaZaA
www.kazaa.com boasts 2m users and promises much, including an instant messaging facility and fast searches. Sadly, logging on took the best part of half an hour, and searches took almost that long. It is also prone to cookies and pop-up advertisements. Definitely one to avoid.
iMesh
www.imesh.com is gaining in popularity. The interface seems to work well enough for music and video, and offers a instant messenger facility. However, like KaZaA, files are marked with a vague rating system rather than telling you the speed of the host modem. Furthermore, iMesh is about to impose its own music filtering. Will it go the same way as Napster?
Gnotella
www.gnotella.com allows three simultaneous searches and file-sharing in all common media formats (MP3, MPEG, Avi, JPEG, Zip, txt). Downloads were fairly quick, and the selection of video files was encouraging. File duplication was still a problem, but it was nice to be able to restrict the number of uploads. Probably the best of the bunch, but not a patch on the original Napster.
Napster
www.napster.com still staggers on, but in a grievously weakened state. Since an upgrade last week the service has been suspended while new filters are tested to keep the record industry happy. Searches still work, as does the instant messaging facility, but with the volume of traffic falling 90% since February, few would deny that Napster is effectively dead.
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