One Year Ago: Music Industry Must Embrace the Net

Despite Friday’s court ruling finding MP3.com liable for copyright infringement, the music industry is going to have to start facing some difficult facts when it comes to the Internet.

After all, the wave of lawsuits against Napster has generated free publicity worth at least as much as the US$1.8 million the company ponied up last week to fund a summer tour by alternative rock band Limp Bizkit — one of the small but growing number of acts that are backing new technology.

The efforts to bring the digital download snowball to a halt may simply be adding to its momentum.

Perhaps the music industry has forgotten that it started the journey down the path that led to ubiquitous downloadable music. Nineteen years ago this week, researchers from Philips and Sony unveiled the compact disc, and a revolution began.

At the time, portability was cited as a major reason for going digital, and it did not take long for the reduced-dynamic-range crowd to give way to progress. Of course, few people knew in 1981 what the Internet would become, or had any inkling of how easy it would be to compress a digitized recording and zap it to a friend halfway around the world.

Ignore Napster?

Now the music industry is thinking long-term. Today, the grand total of dollars lost due to digital piracy is a tidy but relatively small sum, but matters can always change in a hurry. Still, one has to wonder if fighting is the answer.

If the MP3.com ruling sets a strong legal precedent, the shallow-pocketed Napster could collapse under the weight of a single massive judgment against it. On the other hand, if Napster and its underground counterparts are the wave of the future — and music industry honchos obviously think they are — legal roadblocks will do nothing but forestall the inevitable.

Follow the Money

What drives kids to invest in expensive portable players, spend hours hunting for music files, and then wait while their choices download? Money, of course.

For example, consider the high school kid who cannot live without a track off the new Rage Against the Machine album. The teen’s choices are: 1) Spend $12.99 for the CD or maybe $9.99 for the tape (yeah, right) and get 10 or 11 undesirable tracks along with the one popular cut; or 2) find a way to download just that song. The kid might have to invest a couple hundred dollars in an MP3 player, but the investment would pay for itself — and then some — over time.

Follow the Leaders

Enter MTV and its online initiative MTVi Group. Through its heavily advertised Sonicnet.com, MTVi boldly entered the digital download business.

To date, the availability of music to download is limited. With the notable exception of a Pearl Jam recording that recently came out solely in MP3 format, few songs by top-selling artists are being given away.

At least not yet. But how long will it be before everyone follows Pearl Jam’s lead? One thing is certain: It would not mean the end of the music business as we know it. Free music over the Internet will never replace live music — and concert ticket prices are soaring. Licensed T-shirts, posters and other merchandise will continue to fill the coffers of musical acts and their recording industry sponsors.

Of course, Napster, MP3.com or their proponents should not be allowed to conduct illegal activity without consequences. However, all of this litigation does raise the question of where and how the resources of the music industry are best spent.

The Internet has already put companies across all industries on notice that survival in the new economy will require innovation and a willingness to embrace change. Why should the music business be any different?