FC: WSJ goes cypherpunk: Write code, Napster geeks, ignore the lawyers

[Declan McCullagh <declan () well com>]

[Also see summary of study on MP3 attached below. --DBM]

The Wall Street Journal
Monday, June 19, 2000
REVIEW & OUTLOOK (Editorial)

Napster Agonistes

  Once upon a time you didn't have to know about sex until you were, oh, 
15 or so, and the sordid intricacies of the political lobbying process 
could safely remain a mystery until 25 at least.

  If 19-year-old Shawn Fanning is any indication, parents of budding 
software engineers had better sit down early and have a talk about the 
facts of life. We don't know where Mr. Fanning stands on the birds and the 
bees, but the speed at which the Washington trade group milieu managed to 
produce dueling studies about the economic effects of Napster, a piece of 
software he whipped up last year in his dorm room, made even our heads spin.

   One trade group, representing the recording industry, produced a report 
detailing a sharp tumble in CD sales at record stores near college 
campuses, where kids have gone crazy downloading music from each other 
using Napster. Within days, it seemed, came a study by something called the 
Digital Media Association claiming that people were more likely to spring 
for a $16 CD if they could sample the music first with a free download from 
the Web.

  It would be silly to spend much time parsing these numbers except to 
note that overall music industry sales continue to grow nicely. There will 
always be Luddites trying to throw themselves in the path of something new, 
but their doomful predictions have been confounded by the willingness of 
people to consume greater quantities of whatever can be produced and 
distributed more cheaply.

  Music, we suspect, will be no different. When the tape recorder came 
out, the universe of popular sounds consisted of three genres: top 40, 
album rock and soul. Nowadays there are several dozen sub-genres of 
heavy-metal music alone. Somehow the industry adapted to the new economics.

  Call us cynical, but we suspect the industry's effort to put Napster out 
of business with lawsuits has more to do with the fact that Mr. Fanning's 
company has created and occupied a "space," in new-economy parlance, that 
the music companies covet for themselves. But the record companies also 
live in dread of each other stealing a march, so they've agreed for now 
that the best thing is for them to sing in unison, Napster must die.

  This is why Mr. Fanning has yet to become a zillionaire, but his new 
partners from Silicon Valley's Hummer Winblad are working on it. Changing 
tack in court, the firm's lawyers are arguing that trading copyrighted 
music online is perfectly legal as long as kids aren't charging each other 
money.

  If this argument succeeds and Napster looks ripe to stay in business, 
the next move is to open the bidding. And since the likely bidders include 
Time Warner AOL, Seagram and Bertelsmann, Mr. Fanning won't end up on the 
breadline despite cutting short his college career.

  This is the real dance, and last week's dueling studies are mere 
background music. The trade groups hope that their precious factoids will 
lodge in the semiconscious brain of some Congressman, judge or media face 
just as he's about to issue a sound bite or cast a vote on Napster's 
technology. These are just the games that lawyers, lobbyists and other 
putative grownups play. It doesn't mean anything, kids, so keep writing 
that software.


********

Date: Wed, 21 Jun 2000 10:06:37 +1000
To: newmediaresearch () listbot com
From: Phil Graham <phil.graham () mailbox uq edu au>
Subject: Fwd: Norman Lear Center - MP3 Study Release
Cc: Declan McCullagh <declan () well com>,


Date: Tue, 20 Jun 2000 16:44:39 -0700 (PDT)
From: latonero <latonero () usc edu>
To: Phil Graham <phil.graham () mailbox uq edu au>
Subject: Norman Lear Center - MP3 Study Release
FOR IMMEDIATE RELEASE:
Contact: Stephen Rivers or Jamie Falkowski
Phone 310.395.2993

USC Annenberg's Norman Lear Center Study Shows
Music Industry's MP3 Fears May Be Unfounded
Los Angeles -- A month after the University of Southern California (USC)
banned MP3 downloads from Napster, the Norman Lear Center at the USC
Annenberg School for Communication is releasing a survey of the USC
student body that reveals there is little evidence that use of MP3
technologies is harmful to either the recording industry or artists.
This survey of USC students adds significant empirical data to the
national debate surrounding Internet music downloads and music file
sharing software.
"In recent months there has been much concern about piracy of recorded
music on university campuses across the nation, but there has been
little research on how students actually consume MP3s," said Mark
Latonero, principal researcher of the study. "In fact, the findings of
this study on MP3 users contradict many media reports and music industry
fears."
Key findings in the report demonstrate the following:
* MP3 is a major new phenomenon in the university population sampled:
69% of all students surveyed say they download MP3s; of these, 68% use
Napster. Seventy percent of MP3 users say they learned about MP3
technology through close social networks of family and/or friends.
* Unsurprisingly, there is a strong correlation between MP3 usage and
access to faster Internet connections.
* MP3 usage among students has not significantly reduced their CD
consumption patterns. Most students (63%) who download MP3s say they
are still buying the same number of CDs; 10% of MP3 users say they are
buying more CDs. What's more, 39% of students who download MP3s say
that after listening to recorded music in MP3 format, they often buy CDs
containing that music. Students also rated CDs higher than MP3s with
respect to sound quality.
* Sharing music files is a popular activity, but 68% of students sampled
who download MP3s say they have never converted CD music to MP3 format;
70% have never uploaded MP3s to the Internet.
* Thirty-three percent of students interviewed say their opinion of
Metallica has worsened since the lawsuit.
* Fifty-four percent of students surveyed disagree with USCís ban on
Napster downloads.
* Sixty-nine percent of students surveyed agree that copyright holders
should be paid for downloaded MP3s.

* Seventy-six percent of respondents say that society is better off with
new technologies such as MP3.
"The most widely reported reactions to new digital technologies tend to
be at the extremes," said Martin Kaplan, director of the Norman Lear
Center and associate dean of the Annenberg School. "This study offers a
more sophisticated look at the people who use MP3."
In mid-April, USC, Yale, and Indiana University found themselves named
in a lawsuit filed against Napster by the band Metallica. While Yale
and Indiana banned Napster almost immediately, USC originally held
back. A subsequent decision by university officials to restrict
downloads from Napster resulted in USC being dropped from the lawsuit.
The full report, which provides data on the attitudes, characteristics,
and practices of this MP3 user community can be found at the Lear
Center's Web site: http://www.entertainment.usc.edu/
The Norman Lear Center is a multidisciplinary research and public policy
center exploring implications of the convergence of entertainment,
commerce, and society. The impact of new technology on artists and on
the ownership of creative content is a principal focus of the Lear
Center.
#####

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Opinions expressed in this email are my own unless otherwise stated.
Phil Graham
Lecturer (Communication)
Graduate School of Management
University of Queensland
617 3381 1083
www.geocities/pw.graham/
www.uq.edu.au/~uqpgraha
http://www.angelfire.com/ga3/philgraham/index.html
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