shirky.com Clay Shirky's Writings About the Internet
Economics and Culture, Media and Community, Open Source
The Napster-BMG Merger

Napster has always been a revolution within the commercial music
business, not against it, and yesterday's deal between BMG and Napster
demonstrates that at least one of the 5 major labels understands
that. The press release was short on details, but the rough outlines
of the deal has Bertelsmann dropping its lawsuit and instead working
with Napster to create subscription-based access to its entire music
catalog online. Despite a year of legal action by the major labels,
and despite the revolutionary fervor of some of Napster's users,
Napster's success has more to do with the economics of digital music
than with copyright law, and the BMG deal is merely a recognition of
those economic realities.

Until Napster, the industry had an astonishingly successful run in
producing digital music while preventing digital copying from taking
place on a wide scale, managing to sideline DAT, Minidisc, and
recordable CDs for years. Every time any of the major labels announced
an online initiative, it was always based around digital rights
management schemes like SDMI, designed to make the experience of
buying and playing digital files at least as inconvenient as physical
albums and tapes.

In this environment, Napster was a cold shower. Napster demonstrated
how easily and cheaply music could be distributed by people who did
not have a vested interest in preserving inefficiency. This in turn
reduced the industry to calling music lovers 'pirates' (even though
Napster users weren't in it for the money, surely the definition of
piracy), or trying to 'educate' us about about why we should be happy
to pay as much for downloaded files as for a CD (because it was
costing them so much to make downloaded music inconvenient.)

As long as the labels kept whining, Napster looked revolutionary, but
once BMG finally faced the economic realities of online distribution
and flat rate pricing, the obvious partner for the new era was
Napster. That era began in earnest yesterday, and the people in for
the real surprise are not the music executives, who are after all
adept at reading popular sentiment, and who stand to make _more_ money
from the recurring revenues of a subscription model. The real surprise
is coming for those users who convinced themselves that Napster's
growth had anything to do with anti-authoritarian zeal.

Despite the rants of a few artists and techno-anarchists who believed
that Napster users were willing to go to the ramparts for the cause,
large scale civil disobedience against things like like Prohibition or
the 55 mph speed limit has usually been about relaxing restrictions,
not repealing them. You can still make gin for free in your bathub,
but nobody does it anymore, because the legal liquor industry now
sells high-quality gin at a reasonable price, with restrictions that
society can live with.

Likewise, the BMG deal points to a future where you can subscribe to
legal music from Napster for an attractive price, music which, as a
bonus, won't skip, end early, or be misindexed. Faced with the choice
between shelling out five bucks a month for high quality legal access
or mastering gnutella, many music lovers will simply plump for the
subscription. This will in turn reduce the number of copyright
violators, making it easier for the industry to go after them, which
will drive still more people to legal subscriptions, and so on.

For a moment there, as Napster's usage went through the roof while the
music industry spread insane propaganda about the impending collapse
of all professional music making, one could imagine that the
collective will of 30 million people looking for free Britney Spears
songs constituted some sort of grass roots uprising against The
Man. As the BMG deal reverberates through the industry, though, it
will become apparent that those Napster users were really just
agitating for better prices. In unleashing these economic effects,
Napster has almost single-handedly dragged the music industry into the
internet age. Now the industry is repaying the favor by dragging
Napster into the mainstream of the music business.


Write clay@shirky.com with questions or comments.

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shirky.com Clay Shirky's Writings About the Internet
Economics and Culture, Media and Community, Open Source