Music for Nothing.

Why Napster isn't the end of the world. Or even the music industry When disco died, the record industry did not start taking new wave bands to court, demanding that they stop competing with the Bee Gees and kindred has-beens. It went hunting for every Ric Ocasek clone it could find, intent on exploiting the latest Next Big Thing until audiences found it as intolerable as disco.

More recently, much as one generation of listeners decided that it was tired of buying Donna Summer albums, another has decided that it would like to download music on demand from the Internet. With the big labels apparently uninterested in responding to this consumer preference, online alternatives emerged, sporting odd names like Gnutella, Scour, IMesh, CuteMX, and--most famously--Napster.

This time, rather than respond to audience demand, the industry called its lawyers.

Napster was created last year by Shawn Fanning, at the time a freshman at Northeastern University; he has since left school, hoping to turn the program he invented for the hell of it into a profit-making business. Before Napster, fans traded MP3s (the most popular digital music format) either directly, through e-mail, or through Web and FTP sites, most of which shut down after the music industry threatened litigation. Napster and Macster, the company's program for Macintosh users, let you search the hard drives of other Napster and Macster users via a network of servers, then download recordings directly from the other computers.

Napster wasn't the first effort to make file trading quicker, easier, and richer with options, but it was the first that worked well enough to take off: It has been downloaded millions of times--free of charge--and is especially popular in broadband-equipped offices and college dorms. (On some campuses, Napster has been so popular that users have clogged up the data lines, prompting some universities to ban, or try to ban, the program.)

For people without high-speed connections, though, this is a revolution in its buggy phase-- in more ways than one. A download might take 30 minutes rather than three, and it's not unusual--in my experience, it has happened far more often than not--for the transfer to break off before it's done, presumably 

because the other party has turned off her computer. With these technical barriers limiting the range of people who can get much value out of the program, the range of music available has also suffered, though this seems to be improving with time. In addition, many files are mislabeled or incomplete.

Despite this, the music industry is up in arms --or, more precisely, in legal briefs.

Utopia or Oblivion

Like the Net itself, Napster and its progeny have provoked both utopian and apocalyptic rhetoric. By providing a relatively easy way to duplicate and distribute music without paying musicians, songwriters, labels, stores, or anyone else, these programs will, we're told, either a) erase the incentive to write and record songs, thus destroying the glorious cornucopia that is the American music business, or b) liberate artists and consumers from the grips of the giant record combines, thus destroying the terrible empire that is the American music business.

Given the bugs in the system, those fears and hopes have more to do with the programs' potential than with their effects thus far. One might expect musicians, songwriters, and labels to use this grace period to figure out how they'll adapt to the Internet age, much as their forefathers came up with ways to profit from earlier technological revolutions.

When radio became a mass medium, for example, musicians and songwriters initially objected strenuously to anyone playing records on the air. By giving away music for free, they argued, stations undermined their ability to make a living. In the 1920s, radio stations refused to pay anything for the music they broadcast, a situation that ended only after the American Society of Composers, Authors, and Publishers took the matter to court; copyright owners subsequently received royalties each time their songs were aired. They soon discovered that they could profit from airplay in other ways: Radio turned out to be excellent advertising for records and concerts. Similarly, Napster enthusiasts often promise that their program could become "the new radio"--a way to get the word out about new music without fighting for a place on a restrictive radio (or video) playlist.

History thus suggests that online file-trading won't kill the music industry. But it does have the potential to alter it radically, redistributing power to listeners and, perhaps, to artists. When the smoke clears, the music business will be stronger, in the sense that there will be more people making music, and making money from music, than ever before. The hierarchies that now dominate that business, however, will be shaken, flattened, chopped, and stewed.

So it's no wonder that the commanding heights of industry, even as they struggle to adapt to the Internet, are trying harder to make the Internet adapt to them. With the counsel of the Recording Industry Association of America, the big labels have sued Napster, arguing that the program is infringing their copyrights and causing "industry harm"--i.e., reduced CD sales. The National Music Publishers Association has filed a similar suit of its own, as have the rock band Metallica and rapper Dr. Dre. (Defending his suit, Metallica drummer Lars Ulrich has commented that he finds it "sickening to know that our art is being traded like a commodity rather than the art that it is." One wonders why he sells his music at all, if it's "being traded like a commodity" that bothers him so.) Other musicians, such as Limp Bizkit and Chuck D, have endorsed the program, with Chuck D crediting it for "creating new fan interest and establishing a new infrastructure for unknown artists to attract an audience."

Napster may or may not prevail in court, but its lawyers have come up with an interesting array of arguments. Under the Audio Home Recording Act of 1992, the company contends, any noncommercial copying of music is fair use and thus legal. Citing the law's legislative history, Napster's attorneys make a strong case that Congress "deemed taping CDs or records borrowed from friends, and giving copies of one's own CDs or records to friends, to be synonymous with 'personal use,' 'private copying,' 'home use,' and 'private use,'" all of which are explicitly legal.

For its part, the RIAA contends that there is a difference between a right to copy and a right to distribute, and that copying for your immediate friends is not the same as copying for "countless third party strangers." More powerfully, it notes that the Audio Home Recording Act isn't supposed to apply to computers.

Napster also points to a significant precedent set by the Supreme Court. In 1984, the high court ruled that Universal Studios could not prevent Sony from introducing the Betamax VCR just because the machine could be used for pirating videos, noting that the "sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes, or, indeed, is merely capable of substantial noninfringing uses." In 1999, the RIAA sued Diamond Multimedia, maker of a portable MP3 player called the Rio, on the grounds that the device facilitates piracy. A federal appeals court ruled in Diamond's favor, citing the Betamax decision as a precedent.

Given that many artists are deliberately offering their music for free online as a way of making a name for themselves, it's easy to argue that there's more to Napster than piracy--and, thus, that it shouldn't be banned.

This argument is undercut by the uncomfortable fact that the vast majority of Napster searches--87 percent according to the RIAA, though Napster naturally disputes that figure--are for copyrighted material. It is further undercut by some embarrassing internal e-mails uncovered in mid-June. In one message, a Napster executive flatly states that the program's users "are exchanging pirated music"; in another, a manager comments that "admitting we know Napster is used for the transfer of illegal MP3 files might not be the best thing to do."

Napster's lawyers face no shortage of backup arguments--most radically, that attempts "to use the limited monopoly rights bestowed on a copyright holder to control competition in an area outside the scope of the copyright" constitute "copyright misuse," which "bars the copyright holder from enforcing its copyright unless and until its misuse is 'cured.'" Napster's brief argues that since the plaintiffs have themselves engaged in behavior comparable to Napster's--Sony, for example, sells "a portable listening device...that plays MP3 files, regardless of whether the files were made with the authorization of the copyright holders"--they clearly don't object in principle to such technologies. Their actual agenda, the brief continues, is to quell competition.

Morally, this is strong stuff. Legally, it's a bit more iffy.

The record industry appeared to win a major victory on July 26, when Judge Marilyn Patel granted a preliminary injunction ordering Napster to stop the trading until the issue was settled at trial. She also remarked that the RIAA had "a strong likelihood of success on the merits of the case," heaping special scorn on the defendant's interpretation of the Audio Home Recording Act. "It's irrelevant," she explained. "It doesn't apply to computers or hard drives. And Napster isn't an audio recording device."

Two days later, some unexpected news woke the plaintiffs from their champagne hangovers: An appeals court had stayed the injunction, arguing that the suit raises legal questions that have not yet been reviewed by the courts. The two-judge panel will either reverse or uphold the ruling in mid-September. If it's reversed, Judge Patel may well reconsider her initial reaction to Napster's legal arguments.

Beyond Napster

And if the injunction is upheld? Then little will change. Digital file sharing is here to stay, whether or not Napster prevails in court. As other programmers follow in Shawn Fanning's footsteps, software with even more radical implications has appeared, bypassing both legal and moral arguments about intellectual property rights.

Napster may irritate the music industry, but at least it's a sitting target: It has an owner that can be sued, and it relies on a set of servers that can be shut down. Neither drawback afflicts Gnutella, a rival program created by Justin Frankel and Tom Pepper, the same people responsible for the popular MP3 player WinAmp. With Gnutella, every client is a server. There are no central stations through which file--swappers must pass; anyone can get any file--not just music--from anyone else, anonymously. And thanks to an unusual and still somewhat mysterious set of events, the program has no owner to sue.

Frankel and Pepper work for America Online. In March, when they announced what they were developing, AOL pulled the plug in less than a day, calling Gnutella "an unauthorized freelance project." There's been a lot of speculation as to what actually happened behind the scenes. AOL might have been genuinely unaware of what its programmers were cooking up; or it might have dumped Gnutella when it realized the program could provoke a Napster-style lawsuit; or it might have decided to dump it after its merger with Time Warner, a company with lots of copyrights to protect. Whatever happened, AOL's decision to cut the program free didn't suppress it: The source code was soon posted on the Net, and a network of programmers has been working to improve it ever since. (Anyone who'd like to can download the results from gnutella.wego.com.)

Gnutella isn't a perfect program either. "With no notion of whom to trust, a network will break down once it gets large enough," comments David Weekly, a recent Stanford graduate (he got his bachelor's degree in June) who created one of the Net's first MP3 jukeboxes. "Give Gnutella another six to 12 months, and it will have killed itself," he argues. "Not merely from the bandwidth concerns, but mainly from the fact that 0.1 percent of the Gnutella population might run a spam, and this would be enough to bring it down." (Already, a program called ShareZilla is on the market. If it performs the way it's supposed to, it'll attach the name of any Gnutella request to a spammer's file. Thus, a search for a Tupac Shakur bootleg might turn up an ad for an online casino instead.)

The Gnutella community may yet overcome such problems. And if not, they still might be solved by yet another program, Freenet, that's being developed by an Irish coder named Ian Clarke and the usual network of open-source geeks. Freenet promises far more autonomy and anonymity than are available now. It will be "completely decentralized, meaning that there is no person, computer, or organisation in control of Freenet or essential to its operation," the project's home page (freenet.sourceforge.net) explains. "This means that Freenet cannot be attacked like centralized peer-to-peer systems such as Napster." It also "learns to route requests more efficiently, automatically mirrors popular data, makes network flooding almost impossible, and moves data to where it is in greatest demand," thus solving some of the problems posed by Gnutella.

Freenet is still in its early stages of development, but it's already inspiring a lot of hand wringing. And with yet more lawsuit-proof programs undoubtedly on the way, one has to wonder whether the RIAA's legal strategy is sustainable in the long run. It might make more sense for the labels to ask whether such programs' popularity represents unmet demand.

Can the Man Bust Our Music?

Assume, for the sake of argument, that the industry's charges are true: that copying really is stealing, and that Napster is merely a giant burglary machine. Why, then, have so many people used it anyway? It is a matter of faith in some circles that America is undergoing a massive moral decline, but in fact, people don't seem more prone to stealing now than in the past. Indeed, according to the Bureau of Justice Statistics, property crime has been declining for more than 20 years. Why would someone who won't shoplift be more likely to use a file-swapping program?

The cynical answer is: Because he can. That is, given a choice between getting music for free or paying for it, people will take the freebie, especially if there's little risk involved. Obviously, there's some truth to this.

The most common answer among Napster's defenders is: So he can sample music before he buys it. There's some truth to this as well. Radio, constrained by narrow, boring formats, ignores the vast majority of music being made.

Even hit songs are served up when the schedule dictates it, not when the listener wants to hear them.

With little more than anecdotal evidence to go by--there's been no shortage of studies on the subject, but they've reached radically different conclusions, and most have obvious flaws--it's unclear how many users see Napster as a substitute for the CD store and how many see it as a substitute for radio. It's clear, though, that both species of listener exist. And for whatever it's worth--not much, probably, given that Napster use isn't widespread enough to make a difference yet--music sales have continued to increase since the program debuted.

Indeed, file trading may be a much bigger threat to the broadcast business than it is to the recording industry. Even as CD sales are going up, radio audiences have been shrinking. With online file trading emerging as a workable alternative to traditional radio, the latter trend may well continue. Napster may not offer the spontaneity and serendipity that's possible on radio--but these days, most radio stations don't either.

There's a third answer that's often ignored: Because it gives him more options. In this model, the online music trade is a revolt against packaging, with consumers acquiring individual songs that they want rather than filler-heavy albums that they don't, creating do-it-yourself compilations and sometimes altering the music to comic or otherwise creative effect. (One grassroots mix, splicing the famously profane rapper Eminem's hit "The Real Slim Shady" with Britney Spears' sugary "Oops! I Did It Again," was sufficiently popular to get mentioned in the British tabloid New Musical Express.) A unitary product--the prepackaged album--is replaced with a collection of loose parts that listeners may rearrange at will.

Which brings us back to Metallica, a band whose attacks on Napster are gradually mutating into attacks on its own file-swapping fans. "If you don't have enough respect for the fact that I believe this way," drummer Ulrich announced on The Charlie Rose Show, "and that I have a right to challenge it...I don't want you as a fan." (That isn't exactly an expert approach to public relations, though it's an open question whether it will hurt the band or merely take its place next to Johnny Rotten's spittle in rock's grand tradition of contempt for the audience.) At another point in the interview, Ulrich claimed--rather dubiously--that the key issue for him wasn't the potential loss of money but the loss of control. One could easily reverse that: The digital music bazaar doesn't merely save fans money; it gives them a new measure of control over the product. And though the big labels aren't happy about the prospects of losing money, they've often attacked this audience autonomy as well.

They have constantly battled the best digital music format, the MP3 file, on the grounds that the ease with which it is copied makes it ideal for piracy. What have they pushed instead? A succession of cumbersome copy-protected formats that would make it difficult to transfer music from one player to another, a handicap for anyone who wants to listen to the same song at home, in the office, and in the car. Needless to say, none of those formats have caught on.

Meanwhile, despite the obvious demand Napster represents for a market in individual songs, the big labels have been slow to respond: Not surprisingly, they'd rather charge $18 for 12 songs than $1 for one. (CD singles exist, but only as a misnomer--they're more like old-fashioned EPs.) Several companies, such as CDNow, have offered shoppers the chance to create customized CDs, but each offers only a small catalog of tracks to choose from. With Napster, by contrast, you can find thousands of tracks for free.

Indeed, it's unclear at this point whether it's possible to establish an online version of a singles market, now that Net surfers are getting accustomed to free music. EMusic, which lets you download individual songs for 99 cents and full albums for $8.99, hasn't been able to turn a profit, due in part to its limited catalog but also in part to competition from the file-trading programs. By July, the company had grown sufficiently disillusioned with its original business model that it added a subscription-based service to its wares.

If You Can't Beat 'Em...

This spring, the Evolution Control Committee, an obscure band from Ohio, decided to spread its song "Rocked by Rape" via Napster. It did this by renaming the file to look like rare tracks from popular bands. Other artists soon adopted the practice--dubbed Napster bombing in the press--while foes of free music put mislabeled recordings of silence or cacophony into the system. Apparently, the same qualities that make Napster and Gnutella so subversive also make them easy to subvert.

Would it be possible to create a more controlled system, one that weeds out such pranks, guarantees file quality, sorts songs by genre, offers taste-based recommendations, or otherwise provides services that listeners might be willing to pay for? Sure. If you want to stop Napster, don't sue it; try to out-compete it. File searchers who don't want to pay anything for music could still use Gnutella or a program like it, with the tradeoff of not always getting what they want--much as home tapers have sacrificed a certain level of quality and convenience in exchange for not paying high CD prices. Those who'd rather not make that sacrifice could use the controlled services, with a portion of their subscription fees going to the artists who make the music they download.

If, that is, subscribers download the music at all. With a stable, legal mechanism for distributing music online, many listeners might prefer to stream music from a vast digital jukebox instead.

Simultaneously, with the Internet and other technologies sharply reducing production and distribution costs, it would become easier for artists to release music without going through a big label, or to extract a better deal from one of those labels, or to team with other musicians to create a cooperative label of their own. Indeed, the most logical source of new material for a subscription-based service may be the artists themselves, not the labels who currently own most of their "rights."

Already, new models along those lines are emerging, as entrepreneurs and nonprofit programmer cabals carry out their experiments in public. In June, I visited angrycoffee.com, one of several Web sites devoted to musical file sharing. Angry Coffee's search engine, dubbed Percolator, uses two imitation-Napster programs (MyNapster and OpenNap) to do its searches. It used to deploy Napster as well, but then the older company told it to stop. ("We think it's lame that a company that built its business through unauthorized distribution would consider Percolator to be an unauthorized use of their resources," a note on the Angry Coffee site explains, "but they're entitled to their opinion.")

You don't need to download any software to use Angry Coffee, which is nice. Even better, it's a lot faster than Napster. Where the older program might take half an hour to do a download, Angry Coffee typically took me just a few minutes. I hit several bugs as well--the site is still in its beta stage, techie-speak for "we're ironing out the kinks"--but I found only one grievous flaw in the system. When I tried to download a Beck rarity called "MTV Makes Me Want to Smoke Crack," I instead received this annoying message: "Remote user is behind a firewall. Download option from such users is yet to be implemented." This problem recurred with alarming frequency.

In the meantime, I was noticing something: Each time I did a search, the list was preceded by a promo for a different band or musician, none of whom I'd heard of. These, I soon gathered, were independent musicians who'd signed agreements with Angry Coffee; the music search was there to draw me in, in hopes that I'd try out one of the bands. I decided to check out a group called Truman Peyote--if nothing else, they had a cool name--and discovered that the band included Angry Coffee's CEO, Adam Powell (no relation to the Adam Powell who occasionally writes for REASON).

I downloaded one of its songs, which turned out to be a competent piece of funk-rock, then explored the site's roster of artists some more. A Northern California act called Grace was described as "alternamericanacore," which I decided must be the 21st-century term for the genre once called "cowpunk." Listening to one of its songs proved otherwise: The term actually denoted a rather impressive imitation of the Brit folk-rocker Richard Thompson. I made a mental note to check whether Grace would be playing any shows in my area anytime soon.

When I called Angry Coffee, CEO Powell answered the phone. After deriding Napster as a dinosaur and announcing his intention to add yet more search programs to Percolator, he claimed that Angry Coffee's featured artists were getting 200 or 300 downloads a day. Its other acts, he added, were getting 50 to 100. Powell hopes the exposure will soon land someone a recording contract. He also assured me that the company's program guru is trying to fix the firewall problem. Right now, it's the debit side of a tradeoff: Because searchers use the site anonymously, they can't reach past those digital barriers.

I wished Powell luck, wondering how long it would take the RIAA to haul his company into court--and knowing that no number of lawsuits could stem the online revolution he represents.

Jesse Walker is an associate editor at REASON.