Napster: It's About Control, Stupid

Napster: It's About Control, Stupid
I've hardly used Napster at all. I rely on reviews, word of mouth and listening posts — an offline version of Napster. I'm not out to make a hero or martyr out of Napster as such. Its desperate attempts to appease the recording industry and stay in business even if it means becoming just another tentacle of the same recording industry it has been supposedly subverting show its motives to be not purely altruistic.

Still, if the recording industry (the five-label oligopoly controlling most music distribution, airplay and sales) hadn't hounded Napster on the grounds of copyright infringement, we wouldn't have witnessed the rich irony of the purveyors of N*Sync talking earnestly about intellectual property, not to mention the spectacle of record industry lawyers' straight-faced blandishments about what's "morally right."

But the real issue is not protecting copyright or artist royalties. E-biz analysts continually harp on the demand for a format allowing people to build their music collections on their hard drives, but I think that's a bit of a red herring, too — most of us are commodity fetishists and want the whole package: the jewel case, the liner notes, the artwork on the CD itself. And the industry's real grievance probably isn't even that Napster cuts into CD sales. Studies have shown that if anything, Napster likely increases CD sales, and in any case, outlawing Napster and similar services won't shift more units the way cutting CD prices would.

So why did the record industry rebuff the arms-length relationship Napster proposed that would pay it a billion dollars over five years, potentially increase sales and preserve some semblance of the good will of the music fans who line its pockets? Control. The record industry would happily sacrifice a certain amount of sales and run the risk of alienating record buyers in order to safeguard control over how music is distributed and promoted — specifically, what CDs people buy and how many of them they buy.

High-quality music online might increase CD sales, but not necessarily the right sales, from the industry's perspective. Napster puts out-of-print music back into circulation, and independently released music without a big promotional budget or airplay on an equal footing (theoretically) with megastars. Napster even promotes back catalogues without the record companies having to spend a cent.

But providing access to out-of-print records doesn't do anything for record sales, and even if online music increases CD sales across the entire spectrum of recorded music, it works against the concentration of sales in a few titles on a few labels. Sharing music files helps spread the sales around, and that works against economies of scale that boost recording industry profits.

The blockbuster economics are similar to those of the movie industry. Consolidating production, manufacturing and promotional budgets on a few artists, labels reap bigger profits in selling a lot of a few things than a few of a lot of things. It's also why boy groups are frantically being cloned to squeeze as much out of a lucrative trend while it lasts and why it is that when one label buys out another, it's not just excess office staff that gets shed, but some of the rank and file artists on the roster. More artists on your label doesn't mean higher profits.

But what makes the recording industry most nervous is the prospect of music fans make informed decisions. The entertainment industry thrives on an absence of quality control. Caveat emptor is the unspoken business model of big entertainment. No record company is going to refund your money if you find that the CD you just dropped nearly 20 bucks on has two good songs and nine tracks of transparent filler. Napster fans who aren't in it to broaden their horizons have always contended that they see nothing wrong with downloading the only song on an album they like. You can't just drop a couple of dollars for a 45 the way you used to.

Meanwhile, growing numbers of indie labels and self-promoting bands have embraced free MP3 downloads to spread their music, but the recording industry remains cool to free downloads, let alone file-sharing, because they want to figure out how to make online music a purely commercial enterprise without a meaningful promotional or informational function.

I mean, just imagine if people en masse went online and stumbled across a whole world of music on small labels — and even worthy artists who are signed to majors, but are low priorities — that don't make it on to high rotation or get the big in-store display. What if someone noticed that, say, Oasis and the Kingsbury Manx were playing in town the same night, and she downloaded songs by each and unsurprisingly found the indie Kingsbury Manx to be the better prospect? And what if that engendered more curiosity? Big, unwieldy companies just aren't nimble enough to keep up with that, and I'd bet that's the sort of thing that keeps their executives awake at night.