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Doron Levin: Music industry won a battle, not the war

March 6, 2001

The music industry might believe it scored a big win over Napster in federal courts.

More likely the industry's deep thinkers understand all too well that the game is just about up for record companies like Bertelsman unless they can find quickly a radically different way to collect money than selling compact discs.

Nick Economides, an economics professor at New York University, says the electronic sharing of popular music hasn't begun to hurt record company profits.

But that could certainly change as more and more consumers sign on for broadband Internet services, which allow rapid transfer of digitally encoded music.

Napster's central server provided an easy way to share songs over the Internet, and that made it an easy target for the industry's lawsuit.

There's much to lose

What will happen when the son of Napster comes along and locates its server in Bosnia? Or when server-less Gnutella works out the kinks and offers comparable file-sharing performance? As Economides notes, "The fact that storage is becoming cheaper and cheaper means that someone in China soon might be willing to sell you a device with thousands and thousands of songs on it."

How about your 5,000 favorite songs loaded on a recorder that fits in shirt pocket? Sound far-fetched? It's not.

If record companies find a way to participate in the file-sharing revolution they could protect some of the profit they stand to lose. But if the companies continue to rely on intellectual property laws to protect their franchise, they'll wind up with zilch.

The industry's big woes are yet to come because most of us are only beginning to realize that we don't have to pay $12 or more for a CD. I might spend $4.95 a month for Napster.

That might not provide the recording industry the kind of profit it has become used to over the years. But even the judge in the Napster case pointed out: "There's no such thing as a free lunch, but sometimes lunch is more expensive than it has to be."

Napster announced Friday it will begin blocking copyrighted files, a sign that the file-sharing service at last is bowing to the law. As of Monday, hits by Metallica, a leading litigant, were still available.

Fight far from over

But even if Napster eventually halts distribution of a million or more songs or shuts down altogether, the revolution of digital file sharing is an infant. The next industry to feel the sting of disruptive technology is Hollywood. Pirated movies already are available for free if you know where to look, which means they'll soon be widely and easily available for free.

Don't think in terms of cosmic fairness or unfairness when trying to decide whether you're on the side of the record moguls or the digital barbarians at the gate.

The best-paid recording artists and their producers, arrangers, agents and others have lived like royalty since the invention of the phonograph. Others have not lived so well, including a few who have talent.

Don't worry that some future Barbra Streisand or Placido Domingo won't earn a living commensurate with his or her talent. The great minds of commerce always figure out how to offer something we want more than money.

Contact DORON LEVIN at 313-223-4390 or



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