NYT profiles Napster

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From: Rohit Khare (rohit@uci.edu)
Date: Tue Mar 07 2000 - 00:06:43 PST

[Flashbacks to the Markoff "this is Mosaic" piece from late 94... RK]

[Also, thee betamax decision was based on the *Current*, *existing*
non-infringing uses, not, as they quote, the possibility: "Supreme
Court ruled in favor of Sony, because the machine could be used for a
legitimate purpose"]

March 7, 2000
Powerful Music Software Has Industry Worried

When the local alternative rock station listed the 300 top songs of
the millennium in December, Adam Campbell, a freshman at the
University of Oregon, decided it would be nice to own the entire

>Shawn Fanning developed Napster to help a friend find music files.

Two hours later, using the fast Internet connection in his dorm room
and a new online service called Napster, Mr. Campbell had retrieved
275 of the tunes -- free. They sit nestled on his computer hard drive
along with 800 or so other songs he has accumulated the same way.

"That's three days of continuous music," he notes with pride.

The music industry is already disturbed about how easy it is to copy
music via the Internet without paying for it.

But in recent months Napster has greatly magnified the threat. Acting
like a music search engine, the software makes it easier to find and
copy a far wider array of music. It also makes it easier for
individuals to offer their own music collections to others.
Napster, created last year by a 19-year-old college dropout, has
spread so quickly among college students, traditionally the most avid
consumers of recorded music, that the resulting glut of digital
traffic has overloaded university networks. Dozens of campuses have
banned students from using the service -- not because of copyright
issues but to protect their networks.

But Napster is by no means just a college fad. Every day, about a
million otherwise law-abiding adult citizens are demonstrating no
compunction about using the service to get free what they would have
to pay for in a record store. And their numbers are growing rapidly.

Last month, the Recording Industry Association of America filed a
lawsuit against Napster, which is based in San Mateo, Calif., seeking
damages and an injunction that would effectively shut down the
service. Napster argues that it is not liable for music piracy
because the service does not keep any of the music files on its own
servers. The company says that its software simply allows people to
share information. And many of the songs that are traded have been
authorized for copying by the copyright holders.

The recording industry says it has no plans to prosecute individual
users of Napster, though copyright experts say the industry would
have a very strong case. The "fair use" doctrine of copyright law
gives consumers the right to make copies of CD's they own for their
personal use, and plenty of music fans make tapes or create a
duplicate CD for friends without punishment. But Napster complicates
matters because it makes copying possible at a much greater order of

Whatever the outcome of that case, the popular embrace of Napster has
sharpened fears among record industry executives and some artists
that the Internet will undermine the control of copyright holders
over the distribution of their music.

What is more, the case is being closely watched by television and
movie executives, who see it as a glimpse into the future of their
industries. While high-quality video files are currently too large to
be sent quickly over most Internet connections, high-speed -- or
broadband -- services will soon expose other media to the
opportunities and threats posed by digital distribution.

For several years, a technology known as MP3 has allowed computer
users to compress music into files that are close to CD quality yet
small enough to travel quickly over the Internet. But there has not
been an easy way to find such music and then make it available to

A growing number of people use free or inexpensive "ripping" software
to convert their CD's to MP3 format so they can trade music with
friends or listen to their own music on their computers. Partly
because it is probably illegal and partly because it requires some
technical expertise, few take the trouble to make those MP3 files
available for others to download.

Napster essentially gives everyone who uses the software access to
all the MP3 files on one another's computers that they are willing to
share. Napster's own servers simply compile a giant, constantly
updated index of all the music available from its users. Users simply
type in the song title or name of the artist they are looking for,
and Napster generates a list of other users who already have it. (A
search yesterday for Korn, Santana and the Beatle's song "Hey Jude,"
for instance, each yielded more than 100 results). Clicking on one of
the selections automatically copies the file from one user's hard
drive to the other's.

By linking thousands of PC's into a kind of pirates' cooperative,
Napster creates an enormous and continually expanding library of song
titles from which its users can pick and choose.

"Once I got Napster, it was just crazy," said Mr. Campbell, who had
previously sought MP3 files on Web sites or from friends by e-mail.
"It's much more efficient."

Napster's supporters argue that the music industry needs to adapt to
the digital world and must accept that it cannot continue making huge
profits from traditional retail sales.

"Who's to say that because the music business is structured the way
it is structured, that's the way it should always be structured?"
said Stewart Alsop, a venture capitalist in Silicon Valley who is
considering investing in the company recently formed by Napster's

"If I believe the new model is a better way for artists to operate,
that is a moral justification for feeling good about investing in
Napster," Mr. Alsop said, "even though technically what they're doing
is facilitating illegal behavior."

The record industry counters that if copyrights are not protected on
the Internet, artists will have no incentive to create. Moreover, the
Recording Industry Association of America sees a crucial distinction
between Napster and previous copying technologies.

"There's a difference between you sharing a CD with a friend versus
opening up your entire CD collection to everybody in the world to
take whatever they want," said Carey Sherman, the industry
association's senior executive vice president and general counsel.

But within the music industry there is also growing recognition of a
cultural battle that cannot be won in the courts. If today's
teenagers are growing up with the perception that music is something
that can be had free, the industry fears, copyright laws will become
effectively unenforceable.

"There's an incredible disconnect out there between what is normal
behavior in the physical world versus the online world," Mr. Sherman
said. "There are people who think nothing of downloading entire CD
collections on Napster who wouldn't dream of shoplifting from Tower
Records. There's just a massive education program that's needed here
for people to understand what goes into the creation of music."

A Virtual Music Exchange

A new software program called Napster allows users to quickly find
and retrieve music from other Napster users over the Internet. Here
is how it works.

A person using a computer opens Napster and asks it to find a song,
like "Smooth" by Carlos Santana.

In much the same way a search engine looks for Web sites, Napster
searches for computers on the Internet that are also running Napster.

Napster searches those computers looking for MP3 files - a digital
format for storing music - that match the request.

Napster lists the files that are available. The user who initiated
the search can then download the ones he is interested in by clicking
on them.

But some Napster users argue that slashing CD prices might be a
better defense than lawsuits and consumer education efforts would be.

"Honestly, I don't think the record companies need the money." said
Raquel Poy, 18, a freshman at the State University of New York at
Albany. She was using Napster to download James Brown's "Play That
Funky Music, White Boy" during a telephone interview last week. "If I
were to go out and buy a CD every single time I wanted to listen to
something, I would go completely broke."

The industry recognizes that suing consumers for copyright violations
would be counterproductive, which is why the it takes aims at
services like Napster.

"One of the fastest ways to turn potential customers off is to say
they're all a bunch of thieves," said Pam Samuelson, a copyright law
expert at the University of California at Berkeley. "You start hating
your customers and your customers are going to start hating you back,
and that doesn't bode well for your ability to attract them to buy
more stuff from you. It makes them more inclined to infringe rather
than buy."

Although Napster makes no money at this point, interested investors
say there is potentially significant value in the large base of music
fans the service has already attracted. For example, Napster could
collect subscription fees from its users or persuade record labels to
use the service as a marketing vehicle or it could become an
e-commerce outlet for CD's and other merchandise.

As a computer science student at Northeastern University in Boston
last year, Shawn Fanning conceived of Napster as a way to get his
roommate to stop complaining about how hard it was to find the MP3
files he was looking for on the Internet. His solution was a
cooperative model.

The Napster software, which is downloaded free from the service's Web
site, automates the whole process of cataloging, indexing and
enabling the transfer of music files, even though its own computers
hold no music files.

Mr. Fanning, who was nicknamed Napster in junior high school because
of his hair, is trying to turn the service into a business, financed
with money from his uncle and other investors, including Eileen
Richardson, a veteran venture capitalist who is acting as the
company's chief executive.

But even if Napster prevails in the association's lawsuit, its
business model is vague. Paradoxically, its potentially most valuable
product would be the data it aggregates on consumers' musical tastes
and listening habits -- a potential marketing gold mine for the very
record industry that is suing the company.

Ms. Richardson argues that Napster actually spurs CD sales by
enabling users to sample artists with whom they might not otherwise
be familiar, often resulting in the purchase of a CD.
Napster has declared a desire to work with the industry to promote
new artists, but that may not be probable when many record executives
liken the service to the getaway car at thousands of crime scenes.

The staff members at Napster's headquarters in San Mateo prefer to
compare the program to the early days of the VCR. When the movie
industry tried to prevent Sony from selling its Betamax machine
because it could be used to make illegal copies of videocassettes,
the Supreme Court ruled in favor of Sony, because the machine could
be used for a legitimate purpose. In the end, the spread of VCR's
resulted in enormous extra profits for the movie industry.

Certainly, a few of the MP3 files traded with Napster's assistance
have the blessing of their copyright holders. But the overwhelming
majority of Napster's users would appear to be acting illegally.

Technically, Napster is supposed to remove the accounts of those it
knows to be distributing copyrighted material. But the company argues
that it is not responsible for what its users do with its technology.

"Consumers are going to do what consumers are going to do," said
Elizabeth Brooks, the company's vice president for marketing.
Investors agree. Several high-profile Silicon Valley venture capital
firms have expressed serious interest in the company.

For a variety of reasons, most Napster users say they simply do not
believe they are doing anything wrong.

Alfred Werner, 37, of Oxford, Conn., says he uses Napster to get
digital files of the records that he bought in the 1970's but can no
longer play for lack of a turntable. "I bought the right to listen to
King Crimson 15 years ago," Mr. Werner said. "I'm just making a
digital copy of what I have in my closet."

Jeff, a 43-year-old Napster user from Fort Lauderdale, Fla., asked
that only his first name be used because he knew that, say, listening
to the Grammy-winning Santana single, "Smooth" on MP3 instead of
paying $5 for it might be illegal.

"But how illegal is it, really?" wondered Jeff, who owns a small
office-cleaning business. "Is it illegal if you go three miles over
the speed limit? We used to have a road here and the speed limit was
55, and that was crazy. There was never any traffic, and everybody
went 70, and finally they just changed the speed limit. So yeah,
you're breaking the law, but how big a law is it?"

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