Napster's Legal Issues Get Cloudier. Go Figure.

Posted: September 10, 2001 in Life, Music
Tags: , , , , , , , , , ,

Napster Inc. and the music industry came one step closer to ending their long ass war earlier this month. The company announced plans to license music from three of the five major label record companies for its upcoming subscription service.

The new service, due later this summer, is now scheduled to provide music from BMG Entertainment, EMl Recorded Music, and Warner Music Group, whose rosters include such high-profile artists as Christina Aguilera, the Red Hot Chili Peppers, the Beatles, and Madonna.

Napster plans to license the music through MusicNet, the joint venture formed by the three record companies in April in order to make their music available online.

lt seems that while the idea was a good one, the trio of companies couldn’t get the damn thing to work. That being the case, they did what they always do when a new technology threatens their bottom line, they bought it out and infused it into their system (remember the Digital Audio Tape people?).

When the new subscription based service launches, users who pay the monthly fee-an estimated $4.95-will not be able to get music from any of the three companies libraries. The only files available on the service will be the indie labels and anything from other labels that slips through Napster’s filters.

In order to get MusicNet content-which apparently will only be available from MusicNet’s centralized servers, not through Napster’s traditional file-sharing methods users will have to pay an additional monthly fee.

That fee is expected to be around the cost of a single CD, MusicNet CEO Robert Glaser said. MusicNet will provide both streaming and downloadable music, but only in a yet—to-be determined secured format, not as MP3s.

In statements that cast some doubt on MusicNet’s deal with Napster, EMI and Warner both said Tuesday that they would not make their music available to Napster unless they were satisfied with the new system’s copyright protection measures.

But Hank Barry, CEO of Napster, said that he was certain that the record companies would be pleased with the end product, claiming that such concerns “would not be an issue? However precarious, Napster’s deal with MusicNet is exclusive, Barry said.

That means that the two other major label groups, Sony and Universal-who have a competing online-distribution venture called Duet-would have to join MusicNet if they want to provide their music through Napster.

“What we are trying to do is to go from the chaos and the confusion and contentiousness of the way this market’s been, to a market where the consumer experience, and artists and rights-holders get what they want{’ says Glaser. Yeah, and if you buy you probably think Mayor Oberndorf and her cronies on the City Council have our best interests at heart.

Simply put, things aren’t going to get easier anytime soon. With the online music company having sold itself to the French conglomerate Vivendi (parent company to the Universal Music Group) for a whopping $372 million, things are only getting cloudier. It’s another case of “Let’s just buy what we are too inept to create.”

Vivendi now has the online infrastructure it needs to launch Duet with Sony, in direct competition with AOL’s MusicNet.  My, oh my, how things get so complicated so damn quick.

The biggest surprise to me out of all of this is that it was such a surprise to many people. After all, the business does have a long and storied history of snuffing out new technologies that are perceived to be a threat to profits. And when they don’t snuff them out they just throw their vast financial resources at the problem and buy and the thing out.

Audiotapes, DATs, and now MP3s have all been branded “pirating techniques” in the past and now all three are vital parts of the industry. So when Napster hit big late in 2000, they were set on suing to suppress rather than integrate the software.

They trotted the notional “vaporware” in front of an increasingly senile Sen. Orin Hatch and touted bogus deals that were all sound & fury.  All the while crucifying the technology in front of Congress AOLTime Warner, EMI, and BMG formed MusciNet while Sony and Universal tried to launch Duet.

As is par for the course, neither looked very promising. So the next logical step was for the MusicNet deal with Napster and Vivendi’s purchase of, which it quite ironically could have had at half the price if it hadn’t forced the company to spend almost a hundred million dollars in legal fees and court settlements. How does the saying go? lf ya can’t beat ’em, swallow ’em up.

As the dust settles on the online music landscape, there appears to be little left that the big labels haven’t either bought or broken. Napster traffic is plummeting as the court—purchased, er l  mean mandated, filtering systems have made it almost impossible to find the music you are looking for. Among the top-10 music sites, only two don’t belong to the labels themselves.

In retrospect, the labels probably owe Napster a big freakin’ pat on the back for corroborating online music in a rapid and conclusive fashion. lf it had been up to the labels themselves, we’d have had to wait to the end of the decade to be where we are at now.

But let’s not get all cute and cuddly just yet. There will still be some intricate dealings when it comes to multi-artist collaborations, royalty rights to publishers and artists, and the obvious conflict between running a distribution business and a content business. “That’s why record companies can’t own radio stations.” Says David Goldberg, CEO of Launch.

While it finally appears that the proverbial starter’s gun has been fired, these bad boys need to understand that the race is on. Whether they will launch later this summer or not, which seems increasingly less likely, Duet and MusicNet need to understand one thing.

Move fast gentlemen, or in a world where the underground is fine-tuning its file-swapping programs that are harder to pin down than Napster was, you’ll endup like the Jamaican BobsledTeam.

Dead last mon.


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