Why the original Napster wasn't bad for music

Before I go into my opinion, I’d like to list some of the statistics and information I discovered about the Internet and album sales:

On the RIAA web page (www.RIAA.com), there is a segment of FAQs. The first question is: “Does uploading music on the Internet hurt anybody? Isn’t it promotion for the artist?” One particular aspect of the question intrigued me, as it seems to support my opinion below, rather than the industry’s public opinion. “Though most people do not realize it, only about 15 [%] of all releases sell enough copies to make a profit and those record sales support the other 85%, including those from new and emerging artists.” First of all, the majority of “new and emerging artists” out there are not signed by the labels, being hurt by these downloads. The emerging artists are generally struggling to get by and giving their music away for free or selling it for $10 at their shows. In addition, to the best of my knowledge, the music industry has not instituted a revenue sharing program (such as the one in the NFL), where the richer labels/artists, share their profits with the less successful. Finally, it is difficult to justify labeling any artist signed to a Major [label], as a “new and emerging artist.”

Here are some interesting statistics*:
1998:
CD unit shipments grew 12.5% from 753.1 million in ’97 to 847 million in ‘98
CD dollar value grew 15.1% from $9.9 billion in ’97 to $11.4 billion in ’98 – an INCREASE of $1.5 BILLION.

1999:
CD unit shipments grew 10.8% from 847 million in ’98 to 939 million in ‘99
CD dollar value grew 12.3% from $11.4 billion in ’98 to $12.8 billion in ’99

2000:
CD unit shipments grew 0.4% from 939 million in ’99 to 943 million in 2000
CD dollar value grew 3.1% from $12.8 billion in ’99 to $13.2 billion in 2000

2001:
CD unit shipments DROPPED 6.4% from 943 million in ’00 to 881 million in ‘01
CD dollar value DROPPED 2.3% from $13.2 billion in ’00 to $12.9 billion in ’01

2002:
CD unit shipments DROPPED 8.9% from 881 million in ‘01 to 803.3 million in ‘02
CD dollar value DROPPED 6.7% from $12.9 billion in ’01 to $12 billion in ‘02

*I would like to point out that the music industry filed the lawsuit against Napster on December 7, 1999. The first court decision (District Court for the Northern District of California) was on May 8, 2000 and an injunction was finally issued in mid-2001 that shut down the network. This leads me to question how Napster was “bad” for music? 2001 was the first year of the recent trend in annual losses, suffered by the industry. I still have not heard a convincing argument that proves how shutting down Napster improved “music,” or the industry on the whole. However, the CD singles market did virtually disappear: dropping from 66.7 million units shipped in ’97 to 4.5 million in 2002 (about $195 million lost in revenue). Selling one song for $6 (minimum) always seemed wrong to me anyway. In addition, I think the labels made up for it - with the increase of music DVDs (from 485,000 units and $12.2 million in revenue to 10.7 million units and $236.3 million between 1998 and 2002). While I do not have actual statistics, these numbers have certainly increased since 2002, more than making up for the loss in singles sales.

In my opinion, despite the fact that downloading music without permission is illegal, Napster has been, and will continue to be, a positive force for the music industry. As a huge music fan, I have always been interested in the business behind the scenes. I try not to label artists or their work, instead judging them by my own ears. As a result, I have discovered many unique and underground artists over the years and watched them either rise to the number one spot on TRL or struggle in small, unpublicized venues. Napster, Kazaa, and other online/downloading software enabled smaller, abstract artists an opportunity to succeed. The music industry is finally becoming diversified, giving bands the chance to fulfill their dreams. However, Napster did hurt the major labels and their investments. With consumers finally being able to discover music on their own (instead of being force fed label-built groups by MTV, Clear Channel, etc.), more money has been going to small, independent labels instead of the massive majors. High school students discovered bands such as Dashboard Confessional, who later found success on MTV. The lead singer established himself in a virtually unknown, yet talented, hardcore band, Further Seems Forever. Kids have found hip-hop artists, such as Jurassic 5, who have been massively exposed through the Internet and have had incredible opportunities to expand their style of sound into mainstream America. In fact, an absurd amount of artists have been able to survive by the exposure they’ve received over the Internet, by making most of their money in performances.

One cannot deny that market diversification, through illegal activity, is unfair to those artists and labels, who established themselves prior to Napster’s success. The online availability of music removed a segment of the Majors’ profits, spreading it among the smaller labels. As a result, the artists who sell enough records to make significant profits lose revenue with the illegal, online music ventures. It is morally incorrect for people to infringe on these artists’ labor. At the same time, the selfishness of label executives made a serious mistake and cast a shadow over this issue. Record executives, joined by the band itself, argued that Metallica was suffering because of Napster’s infringement. The band has been one of the most popular rock outfits since the mid/late-1980s. If their bank accounts are “suffering,” then these guys have other issues to worry about besides their “Napster-lost” profits. I wonder if it ever occurred to them that their album sales have dropped because their music isn’t as good as it once was or the age disparity between themselves and Teenage-America has spread so far. I did think that it was rather interesting how much better their recent album did in sales after they “went back to their roots” and released an album closer to their early-1990s sound than their late ‘90s/Napster-era sound.

I also have a hard time sympathizing with the Majors, who have a history and reputation of ripping off their artists. With corporate-America running the industry today, the artistry of the music has really suffered. Not only is some of the current, mainstream music created by executives (i.e., “boy bands”), but there are also examples where labels have taken control and claimed ownership over musicians’ works. Recently, Geffen released the Guns N’ Roses “Greatest Hits” album, without permission from any member of the band. What’s even worse is the fact that the individuals, who put forth their labor in creating the music, did not have any input into the release date, album artwork, or even the track selection. In fact, the three most prominent members of GNR (Axl Rose, Slash, and Duff McKagan) filed a petition with a court, seeking a temporary restraining order and preliminary injunction on the release, which was recently denied. The album quickly jumped to the third spot on the Billboard 200 (listing top album sales in a given week – see www.billboard.com) and number one in a few European nations. (For more info, see the following: Guns N' Roses Sues To Block 'Greatest Hits', GUNS LEGAL CLAIM REJECTED, or Gn'R Lose Compilation Lawsuit)

It is difficult to justify downloading music that is played 500 times per day on one radio station. This is illegal and a waste of time, as you can turn on the radio or MTV if you’d like to hear a particular song. However, is it really wrong to download music from those artists who benefit from the exposure? I’m not so sure. I do think downloading music for free, without an ARTIST’s permission, is infringement and morally incorrect. But in reality, Napster was not bad for the music industry on a whole. If the record labels had started working with Napster (and other ventures) back when this new era began, instead of fighting technology and the development of a new marketing tool, the industry would be in a more stable position today. I also think the labels are legally justified in going after companies such as Napster, that contribute to mass infringement. However, going after college and high school students in the “John Doe” suits seems to be an attempt by the labels to make up for their past business mistakes.

While I think the new, pay-per-download music services have the potential to be as convenient for consumers and the industry, the majority of the paid programs now lack the most attractive and beneficial aspect of the “original Napster.” Napster, now partnered with the Majors, only offers major releases, so it is difficult to find the bootlegs, remixes, rare tracks, or underground artists that were some of the highlights a few years ago. “Fortunately,” the Majors have been buying out every independent label possible, which does give consumers access to mid-size artists that were once difficult to find. However, it is going to cost you $1 to hear a full sample (30-second samples are free). Happy spending!

Oh yeah – another interesting story involves members of the Majors who tried to weasel their way onto the Napster board (Click here for link). Shawn Fanning, Napster’s creator, had to bring individuals to court, in attempts to oust them.

Click here for a a good summary piece