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Napster Gets It,
Universal Doesn't

by Jon Leland
Originally published in Videography Magazine, July 2000

Attention, video Web enthusiasts! Not only is the world of online video growing and changing rapidly, but making sense of it requires vision, the ability to think outside the box of old paradigms and, perhaps, the wisdom and openness to comprehend a paradox or two.

Consistent with the video Web's brief history, audio is showing us the way; and, in some cases, audio is also showing us what is not the way. Because audio is so much smaller in bandwidth requirements than video, it streamed first; the number of live radio stations dramatically exceeds the number of online TV stations, and so forth. Invariably, just as radio preceded TV, in the online world, video follows audio.

In fact, as sensible video professionals, there is a lot that we can learn from the current music industry revolutions that are being dramatically played out online. Perhaps most noteworthy is the current Napster/MP3 digital tug-of-war with the big record companies over intellectual property rights and more.

This new online culture operates on radically different assumptions than those that we take for granted in the old media world.

I find this battle fascinating not only because it reflects the cutting edge of new online media paradigms, but also because of the ways that it reflects some important dimensions of the emerging online culture. I think that it is important to note that this new online culture operates on radically different assumptions than those that we take for granted in the old media world. In fact, if you consider the Napster-driven revolution in online audio distribution in terms of our current financially-driven culture, it might even be more accurate to call Napster the reflection of an "anti-culture," but that would negate its positive qualities (and I'm getting ahead of myself).

Bottom line, if you want lessons that are relevant to getting ready for the new worlds of online video distribution, watch the audio/music madness that's surrounding the battles over MP3 music distribution.

I used to love the way that Steve Jobs used the word "bozo" to describe ineffective people who don't "get it" with regard to new technologies. That word is useful here because, as in many learning situations, sometimes the illustration of what NOT to do can be extremely informative. In the case of the "MP3 Wars," the best example that I've seen of what not to do is Edgar Bronfman, Jr., the President & CEO of The Seagram Company, Ltd. Of course, Seagram is the parent conglomerate that owns all of the Universal entertainment companies, including the Universal Music Group, which (according to its own press release) is "the world's largest recorded music company."

I saw and heard Mr. Bronfman deliver a keynote address during my brief May visit to the 2000 RealNetworks' Developers Conference in San Jose. Not only did I witness an old-world-style executive spin-job that I found embarrassing and scary in its ignorance of online marketplace dynamics; but I found Mr. Bronfman's war-like metaphors to be extremely misguided.

Sorry, Edgar, the Internet will not collapse no matter how much you huff and puff.

Someone who I hoped would be projecting a vision for the future was seemingly defending a sandcastle at low tide. I don't know if I was more offended by his violent language (which included, for example, a reference to his intended use of "growing arsenals of technological weapons") or his arrogance to threaten the survival of the Internet (as if he had that power). He said that the Web would "crack, crumble and collapse" if Napster's "unfair and unjust paradigm" is required for the Internet to "perpetuate itself." Sorry, Edgar, the Internet will not collapse no matter how much you huff and puff.

At the same time, Mr. Bronfman made no reference whatsoever to the fear that is being caused by his company's eroding sales at the hands of independents or its loss of dominant market power. Nor did President Bronfman deem it appropriate to answer any questions whatsoever at this otherwise interactive forum. Like I said, this was an executive spin-job; and, in my opinion, that kind of behavior just doesn't cut it anymore, especially with web-savvy audiences.

I suppose that dinosaurs have a tendency to dig in their heels as a ritual way of beginning to signal their decline. On the other hand, I would think that the likes of Mr. Bronfman would be building bridges to these dynamic new marketplaces, rather than declaring war on them.

To me, for Bronfman to declare war on the teenage audience that is both filling his pockets and at the same time dramatically embracing these new distribution paradigm's in massive numbers is something akin to jamming on the brakes at 80 miles an hour in the midst of a crowded freeway. It makes being rear-ended a very high probability. This analogy works not only because of the pace of the Internet's speed, but also because of the momentum of the renegade music markets in particular.

Napster BadFortunately, other record companies are setting a better example. At press time for this issue, two other major record labels, BMG and Time Warner settled their suit with (not to be confused with the more radical Napster system which is a software application, not an e-commerce web site). As the New York Times' Matt Richtel reported on June 10th, this settlement "appears to signal a recognition by the labels and by that the traditional and the online businesses need each other and can profit by working together."

Napster, who New York Times Magazine columnist Andrew Sullivan called "a musical commune dreamed up by a college freshman geek," allows users to share MP3 files freely and without compensation of any kind to anyone. It's service is not covered by this settlement and represents a completely different paradigm. (For more on the social impact of Napster, I highly recommend Mr. Sullivan's article "Dot-communist Manifesto". Site registration may be required.)

Napster is an important development for the world of online media distribution mostly because of its astounding success. And perhaps this success is even more significantly because it is apparently not profit motivated. Napster is extremely powerful (and virtually indestructible) because it reflects the communal spirit of audiences that are empowered by the Web's radically different distribution paradigms.

Created by 19-year old (and now Fortune magazine cover boy) Shawn Fanning while he was a freshman at Northeastern University, Napster has grown up in about a year to become one of the most significant forces in Internet media. According to The Industry Standard, an e-business magazine, Napster is still growing with 200,000 new downloads of the Napster application each day adding to an astoundingly large user base of approximately 20 million users. I believe that makes Napster bigger than (or at least comparable in size to) the other major online media applications, RealNetworks, Windows Media Player and QuickTime (all of whom also play MP3 files.) Essentially, the Napster software enables music enthusiasts to access a global database of digital music (MP3 files) including all of the files offered by any other Napster user. According to the Web site, Fanning saw the opportunity of combining the "practicality of sharing music... with the community features he enjoyed with Internet Relay Chat (IRC)."

I will write more about this social dynamics in the future. For now, the single most important point that I want to make is the fact that it is the qualities of community, collaboration and, yes, even sharing, that have empowered both the birth as well as the continuing growth of the Internet. The lack of recognition of the power of these qualities explains why a lot of e-commerce sites are still struggling - not to mention why the likes of Mr. Bronfman are bungling their responsibilities.

In the online media world, lawsuits like those initiated by Universal, among others, and by the rock band Metallica, among others, only create bad guys for the audience to focus on. In fact, one of the funniest pieces of online media that I've seen in a long time is an animated Flash cartoon called "Napster Bad." A spoof of heavy metal band Metallica's lawsuit, this cartoon features caricatures of two band members raving about their riches and how their gonna put Napster users in jail. This very entertaining and relevant short is available from the web site of its creator, Camp Chaos Entertainment of West Lawn, PA.

As Bob Sesca, Camp Chaos' president and lead animator explained it to me, "You can't put the egg back in the shell or the toothpaste back in the tube." In essence, the Internet has already come too far for these audiences to stop enjoying their new found freedom. And, furthermore, for every lawsuit or "technological weapon" entertainment conglomerates may unleash, Sesca says that there are "a thousand teenagers who will create a software patch or find a way around it." He believes that executives like Bronfman are going to meet with "more resistance than they can imagine."


Of course, the sub-text of Brofman's declaration of war and Metallica's lawsuit is that, just as in the film world, independents are becoming more powerful.

Napster... leverages the kind of promotion that big record companies can't buy: word of mouth.

To explore this dimension, I spoke with Derek Sivers, CEO of, a web site which sells CD's for independent artists only. Sivers emphasized that Napster helps his company to sell CD's for independent artists because it leverages the kind of promotion that big record companies can't buy: word of mouth. In other words, Napster's biggest asset is its community of 20 million users. If someone recommends an artist to a Napster user, they can use Napster like a search engine to find a music clip by that artist and to hear their latest music.

In terms of the music industry's bottom line, Sivers said that Napster is good for business. He said, "Napster is keeping people's attention on music. Anything that keeps the public's interest on music will help the music industry as a whole. Even if an artist's work is acquired free the first time, it still leads eventually to increased sales." Next month, I'll give examples of how this is good for the video industry, especially for works by independent video "artists."

And finally, just to be clear, I'm not saying that intellectual property rights are not important. I did agree with one point that Bronfman made when he said, "people want to do the right thing." I agree, and I also believe that people will ultimately support artists whose work they appreciate. In this sense, once again, the spirit of the Internet's communities is an asset to be appreciated; and whether you are an independent or a conglomerate, I believe that you resist the new world of the Web at your own peril.

Of course, there's much more that I could and will say on these fascinating topics. For now, all I can recommend is that you stay tuned.

Jon welcomes feedback and suggestions via e-mail at [email protected]


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