Funny how things come back to haunt you. Nearly 20 years ago the record industry introduced the CD and music sales boomed. Now it must be wondering whether it was all a horrible mistake. CDs and the digital music they carry have spawned a monster that is threatening to destroy its creator. That monsterâs name is Napsterisation.
Ever since college student Shawn Fanning hit on the idea that people could swap digital music files over the Internet, Napster and its successors have put the record industry through an emotional grinder: fear at the prospect of being wiped out, envy at the popularity of a system beyond their control, and wrath at what they see as mass theft. Now the industry is hitting back.
Over the next few months the major record labels will launch a technological and legal blitzkrieg against file-trading networks such as KaZaA and Grokster. At the same time it will invade their territory with official websites that give fans the music they want, but at a price. As the blitzkrieg gets under way, ordinary music consumers will start to feel the shock waves that the file-trading world has set rumbling through the music business.
Advertisement
No one knows exactly how things will pan out. But if the music industry gets its way (and as vinyl aficionados will tell you, it usually does) weâre embarking on the biggest shift in the way music is consumed since the gramophone elbowed out sheet music.
Should music lovers be celebrating? Online selling and distribution promise to turn your computer into a universal jukebox, giving you cheap and instant access to the worldâs back catalogue. And consumer electronics companies are already developing âhome entertainment serversâ that slot into your stereo and allow you to download and play music in your living room straight from the Net. But there are less appealing possibilities too. The same mix of technology and legislation thatâs being thrown at the pirates could also be turned against more innocuous infringers â people who copy a CD to play in their car or who make a compilation tape for a friend. In short, people like you and me.
The revolution began three years ago when Fanning wrote a software package designed to let fans share digital music. Out went home taping, in came Napster. It was made possible by two technological breakthroughs the record industry couldnât have foreseen. The first was digital compression technology such as the MP3 format that allows music files to be squashed into data packets skinny enough to download quickly from the Internet. The other was file-trading software like that written by Fanning. Together they transformed the Internet into a music distribution medium of unparalleled reach and speed.
Unwittingly, Fanning had found the Internetâs killer app. Within 18 months, Napster had 38 million users. It didnât take the music industry long to wake up to the threat. In late 2000 the major labels took Napster to court and won a ruling that closed the service down. But it was a pyrrhic victory. Most file traders just upped sticks and took their MP3 collections elsewhere â to networks such as Grokster, KaZaA, Gnutella and eDonkey2000. Worse, the publicity generated by the legal action alerted people to the joys of free music. File trading went into overdrive.
Today, the scale of the phenomenon is staggering. The most popular network is probably KaZaA with around 50 million users. They download a total of 2.5 billion music files every month, almost all of them illegal. By way of comparison, legitimate sales of singles are just 2.5 million a month worldwide. And KaZaA makes up just a fraction of the file-trading universe.
What frightens the music business about file trading is its virulence. All it takes is one person to âripâ the contents of a CD into MP3 format and put it on a file-trading network and itâs instantly available to everyone else for free. A single rip can create an unlimited number of copies, each just as good as the original â and just as easy to copy.
Whatâs worse, most new computers come with a built-in CD rewriter that can âburnâ MP3 files onto cheap blank CDs. Download and print the cover art too and thereâs no need to buy CDs.
Not surprisingly, the music business views ripping and burning as a deadly threat. Three months ago, the International Federation of the Phonographic Industry, a lobby group representing the five major record labels, announced the first significant decline in global music sales since 1983 (see Diagram). This confirmed the IFPIâs worst fears: file trading was no longer just a fringe hobby for geeky college kids, it had gone mainstream.
In 2001, for example, the biggest-selling album in the US â Hybrid Theory by Linkin Park â sold only 4.8 million copies, the first time since 1966 that a chart-topper has shifted fewer than 5 million. Yet this February alone, the album was downloaded illegally 5.3 million times, according to London-based Net monitoring firm NetPD.
Not every download is a lost sale, but thereâs good evidence that a download free-for-all discourages buying. The best evidence for this comes from Germany. According to the German branch of the IFPI, last year saw a sudden decline in legitimate music sales and a corresponding increase in pirated music. Pre-recorded CD sales fell 10 per cent, while blank CD sales rose 37 per cent. The upshot was that German consumers burnt nearly as many CDs as they bought â 182 million versus 185 million. Of those burnt CDs, one-third contained pirated songs downloaded from the Internet. Another German study joins the dots between rising piracy and falling sales. In a survey of 10,000 people, market research company GfK of Nuremberg found that 20 per cent of people who downloaded and burnt music were buying fewer albums as a result. Only 6 per cent bought more. Studies in Sweden, Japan and Canada have come to similar conclusions.
For an industry grown fat on years of steady growth, the decline was a call to arms. The first phase of its war on piracy, which has already begun in earnest, is to search out the illegal networks and destroy them. That usually means dragging websites to court and getting them closed down. Last year the industry had more than 1000 sites shut down, eliminating 540 million illegal music files in the process. The latest site in the firing line is a Napster clone called Audiogalaxy which caved in just weeks ago. These actions have a strong legal tailwind, with new copyright legislation coming into force worldwide (see âDigital copyright regulationsâ).
There are technological solutions too, such as those provided by NetPD. Its software packages trawl the file-trading networks carrying out âsearch and eraseâ missions, looking for specific pirated songs and deleting them. When rock band Metallica hired NetPD to hunt down illegal copies of its music, it found and destroyed 5 million files and cut piracy of Metallicaâs music by 90 per cent.
The figures sound impressive, but the industry canât hope to stamp out piracy in this way. File trading is a monstrous Hydra: for every site that gets beheaded, two sprout in its place.
Hence the second phase of the attack: incorporating anti-copy technology, either in the discs themselves or in the playback and recording equipment. But thatâs where things get tricky.
Copy-protected CDs started trickling onto the market in 2000, and soon this flow will become a deluge. Universal, one of the big five record labels, says it will add copy protection to all its major releases by the middle of this year, and the others are following suit. Universal favours a system that allows you to play the CD on any device including a computer CD drive, but not to copy it. Other systems are more restrictive. Sony, for example, has started releasing discs that wonât play on a computer at all.
So far, copy protection has failed to please anyone. There are already billions of unprotected CDs and CD players out there. And critics say that any copy protection will always be crackable, and point out that all it takes is a single crack to flood the file-trading networks. âAll approaches using cryptography we know donât work,â says Alan Cox of the British think tank Foundation for Information Policy Research. âIf people are willing to make the effort, itâs game over.â
Copy protection also narks consumers, often to the point of hostility. Consumer groups argue â quite reasonably â that people should be able to play a CD theyâve paid for in whatever device they choose. Worse, there are hundreds of reports of copy-protected CDs failing to play on a regular CD player or crashing computers so severely they need to be sent away for repairs. And consumers arenât the only people up in arms. Electronics companies donât particularly like the idea of copy-protected CDs because customers tend to blame the equipment rather than the CD if it wonât play. Even car dealers are starting to get twitchy as customers return new cars to the showroom asking for perfectly good CD players to be âfixedâ.
While the music industry acknowledges these problems, itâs unrepentant. âI donât think anybody in the industry sees copy protection as particularly desirable,â says Jorgen Larsen, chief executive of Universal Music International. But he says itâll be used as a âstick while we grow a new carrotâ.
That carrot is a new generation of Napsters, this time run by the recording industry and charging a monthly subscription to users. The first two â Pressplay, run by Sony and Universal, and MusicNet, run by AOL Time Warner, EMI and Bertelsmann â went live last December.
As yet, neither has won consumers over. Both claim theyâre happy with uptake, but they wonât reveal how many subscribers they have. Reports that numbers range from just tens of thousands to half a million each, however, suggest theyâre inflicting little or no damage on the pirates.
Itâs not simply that you have to pay to use Pressplay and MusicNet. Many believe they provide a poor service. âThe popularity of Napster was not just that it was free,â says Graham Spencer, co-founder of consumer rights group DigitalConsumer.org. âA big part was that it was flexible.â Users could download almost any music and do almost anything with it â such as make multiple copies, send it to friends or burn it onto a CD.
Downloads from the industry-run services are nowhere near as user-friendly. Music files software is essential to the music industryâs assault on piracy. Without it MusicNet and Pressplay are just another shop window to loot.
Firstly, DRM makes downloads impossible to copy. It also stops subscribers consuming more music than theyâve paid for. A basic Pressplay subscription, costing $14.95 a month, for example, buys you 50 downloads a month and no more. Let your monthly subscription lapse and the music you have already downloaded expires like an out-of-date train ticket.
There are other drawbacks for the consumer. With the existing services, music remains locked in the computer that itâs downloaded onto, which means subscribers canât take their music from room to room, let alone play it in the car or on a personal stereo. Pressplay subscribers can get round this by burning their downloads onto a CD, but they have to pay extra and are limited to 10 burns a month and only two songs by any single artist. MusicNet users cannot burn anything. For many, itâs a pretty frustrating experience.
The industry is aware of the bugbears and wants to put them right. MusicNet plans to introduce a CD-burning option, and Pressplay says it will soon let subscribers burn as many tracks as they want, as long as they pay for them. But first they must find a way to add unobtrusive copy protection to the burnt CDs.
âWhat people want from the Internet is a clear step forward,â says Martin Lambert, chief technology officer at British DRM company SealedMedia of Beaconsfield. âAt the moment itâs a step backwards.â SealedMedia, for one, has decided not to get involved in music protection, mainly because it thinks music DRM is too easy to fool. Instead, it concentrates on protecting other types of digital media. Itâs not difficult for hackers to write software that tricks music DRM systems into thinking theyâre feeding music into a legitimate playback device when in fact itâs going straight into a piece of hacked software that rips the music into an MP3 file. Hackers have already done this to Microsoftâs MRM DRM system, and any real solution is at least five years away, according to Lambert.
With all these problems, itâs no surprise that the industryâs actions have triggered rumblings of discontent. In the US, for example, one pressure group is calling on the industry to honour âpersonal useâ rights, such as the right to make a couple of copies of music youâve bought. âThe recording industry sees anti-piracy as a great opportunity to take complete control,â says Spencer. He warns that an effective DRM could, for example, enable the industry to confiscate your entire collection of downloads. And he argues that copy-protected CDs already breach US copyright law by stopping people making personal copies of music theyâve paid for.
In Europe, too, activists are questioning the music industryâs motives. âEgregious cases of copyright infringement can be handled by law enforcement. So why all this technology?â says Cox. His colleague at the Foundation for Information Policy Research, Martin Keegan, describes it as a âland grabâ, and suggests that the music business is using piracy as a smokescreen to stamp out all forms of copying.
In truth, the industry would be crazy to wipe out piracy altogether. Thereâs some evidence that a certain amount of file trading is good for business. It acts as free advertising â consumers get to hear lots of new music, some of which they buy. The latest evidence for this comes from market research company Ipsos-Reid, which found that 81 per cent of people who downloaded illegal music said they bought more music or just as much as before. Itâs not clear what that optimum level of piracy is. Perhaps the record industry should try to find out.
Alternatively, the industry could shed its obsession with copy protection and lawsuits and open its eyes to one anti-piracy strategy thatâs staring it in the face. Last year, two big music markets bucked the global sales trend: Britain and France. How come? The industry has identified one common factor, something it calls âlocal repertoireâ: both countries have produced home-grown, non-manufactured acts such as Dido and Air that have committed fan bases built up through the traditional virtues of performing at gigs and regular releases of new songs.
Thereâs no reason why the same strategy wouldnât work elsewhere. Instead of expending all its energy stamping out piracy, some observers believe that the industry should stop pushing manufactured, anodyne music that many feel no compunction about stealing, and rediscover the art of nurturing bands worth paying to hear. Now thereâs a change all music lovers could celebrate.
World Intellectual Property Organization Phonograms and Performances Treaty
Adopted in 1996, the treaty gives the green light to technology such as cryptography that prevents illegal copying of digital works
US Digital Millennium Copyright Act 1998
The act is based on the WIPO treaty, but goes beyond the guidelines by making it illegal to sell or distribute tools (such as software) that circumvent copy protection
European Union Copyright Directive 2001
Also based on the WIPO treaty. Member states now have until the autumn to incorporate them into national laws
US Consumer Broadband and Digital Television Promotion Bill 2001
Would prohibit the sale and distribution of any playback device, including computers, that donât include government-approved copy-protection technology