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Swaps to outlive Napster
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July 27, 2000: 7:07 p.m. ET
Web rife with Napster clones, but legit companies seen wooing music lovers
By Staff Writer Franklin Paul
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NEW YORK (CNNfn) - Napster may be down for the count, but as you read this, many thousands of songs are being swapped on the Internet, and a ream of court orders couldn't stop it, experts say.
Deemed a tool that eases copyright infringement, Napster's service could be shut down on Friday, following a preliminary injunction ruling by U.S. District Judge Marilyn Hall on Wednesday in California. Napster must stop distributing copyrighted music recordings until the recording industry's lawsuit against the company goes to trial.
But the reaction of some online music experts amounts to a collective "So what?"
 "They're already third-party Napster servers, that I can just point my Napster client (software) to some other server and I don't have to use a server that's run by Napster," said Eric Scheirer, media and entertainment analyst for Forrester Research. "You just download a different (small software program) and go to a different site an you can essentially use the same Napster service you were using before."
Moreover, industry analyst Mark Mooridian, of Jupiter Communications in New York said Napster's existence is a moot point, since there are already many applications available to take its place. Napster clones will remain up and running, and names like Gnutella, Freenet, and Hotline are software options well known to the online file sharing community.
"That kind of software is so easy to generate and its even more distributed than Napster is," he said. "You can't stop that phenomenon; you can only hope to keep it not-so-mainstream."
The free exchange of music, and other types of entertainment and intellectual property, is here to stay, they say, even if the recording industry, which brought the suit against Napster, eliminates what is believed to be the most popular and easy-to-use music exchange system.
Where do 20 million Napster users go now?
So what happens now to some 20 million Napster users, who have tasted the ability to pluck any song they desire, whenever they want, for free?
Will they wait as a tiny stock of songs trickle onto the Internet from the recording industry -- for a price -- or will they seek out other techniques?
Some market watchers suggest that as you read this, there's a free-for-all going on in the software community as programmers - novice and professional - conjure new code that lets users swap songs for free, improving on Napster's user-friendly interface, but without its centralized system.
That's important, because if there is no central target, no clearinghouse for he distribution of music, then no real remedy exists for stopping the exchange of pirated music.
Unlike Napster, Gnutella cannot be unplugged, unless one imagines copyright holders taking one of two unlikely approaches: switching off the entire Internet; or pursuing legal action against millions of individuals - that is, if one can locate violators on the vast global network that's called the Internet.
On the other hand, there is a contingent of users who may have picked up today's newspaper and realized that swapping music files was an abuse of copyright. Those citizens might seek out more legitimate means for getting music over the Web.
 Choices abound, though one's power to select exactly what one hears is much more narrow than on Napster, and cost becomes a factor. For example, EMusic.com on Monday introduced a subscription service, where enthusiasts can download their fill of available songs from popular artist for less than $20 a month.
Other companies, which unlike Napster have signed usage agreement with the major recording labels, will allow users to keep songs in "lockers" so that they can access the tunes from any computer. In addition, hundreds of radio stations, both local and those built around genres, stream their signal for free.
All of these players are expected to trumpet their existence in coming months as online consumers look for "the next Napster."
"I see this as a major opportunity within this month-or-two-month period of confusion, for legitimate services like EMusic.com or Myplay.com to really say, 'Can't use Napster anymore? Come with us,'" suggested Forrester's Scheirer. "They want to attract those consumers before they figure out how to use Gnutella," said Scheirer, noting that so far Gnutella is somewhat harder to use.
For most, it's music business as usual
For all the water cooler talk about online music distribution and Napster, the truth is that for the foreseeable future consumers will continue to hear music primarily on the radio, and buy physical disks at brick-and-mortar or online retailers - just like they do now.
According to a recent study by Jupiter Communications, in 2005 sales of disks purchased online and shipped by mail to buyers will reach $3.8 billion, far larger than sales of music subscription services, which will account for $980 million in 2005, and a la carte download music, which will grow to $531 million.
Still, the download phenomenon is sexy because of its high growth potential - remember, when Sheryl Crow debuted in 1995, there was virtually no download business to speak of.
The recording industry, busy developing security assurances and going after foes like Napster and Scour.com, has moved slowly to make available its vault of millions of songs. But Napster's rapid growth made clear the existing demand for online music, and lights a fire underneath the industry to meet that demand -- before someone else does.
"In terms of major label content, it's going to come around," said Mooridian. "They now are in a position where they are pretty much forced to act, because there are so many more alternatives that are coming, which are more and more convenient.
"They can't not react to that," he added. "Otherwise they end up doing way more damage then they ever hope to prevent."
Studies have shown that consumers are willing to pay for music distributed online, but try as they might, most struggle to locate the songs they seek, from oldies that may be unavailable at retail to some of today's hottest chart toppers.
Some labels have already begun to offer digital versions of their songs for download. Sony Music Entertainment, for example, sells digital downloads on its Web site of artists, such as Billy Joel, and Lauren Hill.
EMI Group this week released 100 albums for digital download this week by artists such as Frank Sinatra, Snoop Dogg and Bonnie Raitt through Microsoft Corp.'s Windows Media Player.
Artists sees both sides in Napster debate
The debate rages over who is most harmed by the free exchange of music on the Internet. Some recording artists say Napster-style song swapping is nothing short of thievery. Others see song sharing as a boon to record sales and incentive for listeners to attend concerts and buy T-shirts.
Still others are torn, and hope that a fair system that satisfies both artists and consumers is worked out soon.
"I'm very much in favor of the technology of what Napster does -- the ability to expose music to as many people as possible," said James "Jimmy Jam" Harris III, a former member of the funk group The Time, and co-writer and producer of recordings that have sold more than 100 million copies.
"However, I also feel that music is very valuable, that it is an asset," he told CNNfn.com from Minneapolis. "The publishing (rights) that I own is what I hope to give to my kids; it is my legacy."
Publishing rights are often called the "gift that keeps on giving" by songwriters, whose fame comes not on the cover of glossy pop-culture magazines, but in royalty paid to the rights holder for their life-plus 75 years.
 Radio stations, restaurants and other venues pay those rights, unbeknownst to the average listener. The recording industry came after online services like Napster and MP3.com for making songs available without acquiring any rights. MP3.com has reached agreement with some record labels.
A self-proclaimed technology enthusiast, Jimmy Jam said he doesn't fault consumers for wanting to get music for free, but notes that there is value and cost involved in the creation and production of music, and insists that money must be generated somewhere in the download scheme.
"Somehow, fans think that the artists being greedy -- I don't think anybody is saying that the consumer should pay to swap files or download music," said Jimmy Jam, a Grammy award winner who, with partner Terry Lewis, has crafted hits songs for myriad artists including Janet Jackson, Boyz II Men, Jon Secada and Rod Stewart.
"But somebody has to pay," he said. "I am very much into protecting the right of songwriters and musicians and publishers. It's a wonderful technology and we need to get a way to make it work for everyone."
Whatever the result, Forrester's Scheirer suggests that any such agreement won't involve Napster Inc., which in its year of operation has yet to generate revenue and functions without a concrete business model.
"I've never thought that Napster had any real promise as a company," he said. "Maybe this (court decision) is the harbinger of a quick painless death rather than a slow lingering death." 
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