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`

`

`12/27/21, 11:12 AM
`
`The State of Music Online: Ten Years After Napster | Pew Research Center
`
`concern. Chris Anderson, author of The Long Tail and Editor-in-Chief at Wired ignited a
`fiery debate amongthe technology and entertainment community recently when he
`publishedanarticle touting free content as the key to earning incomein thedigital age.
`Hisarticle, titled, “Free! Why $0.00 Is The Future Of Business,” argues that whendigital
`content approaches zero marginal cost to distribute, the more you give awayforfree, the
`more you cansell to the small segment of consumerswhoarewilling to pay for premium
`content.
`
`While the music industry has been onthefrontlines of the battle to convert freeloaders
`into paying customers,their efforts have been watchedclosely by otherdigitized industries
`—newspapers, book publishing and Hollywood among them—whoare hoping to staunch
`their own bleedingbeforeit’s too late. And if the music marketis any indication of how
`consumer expectationswill evolve elsewhere, the demandsfor free content will extend far
`beyond the merecost of the product.
`
`In the decadesince Napster’s launch, digital music consumers have demonstratedtheir
`interest in five kinds of “free”selling points:
`
`1. Cost (zero or approaching zero),
`
`2. Portability (to any device),
`
`3. Mobility (wireless access to music),
`
`4. Choice(access to any song ever recorded) and
`
`5. Remixability (freedom to remix and mashup music)
`
`For today’s Napster, that meansthat along with the unlimited streaming capability that a
`monthly $5.00 subscription fee buys, thelisteneralso scoresfive “free” digital downloads
`with nostrings attached. For someartists, Anderson’s scenario translates into giving away
`the entire album for free in hopesthat fanswill pay for concert tickets or limited access to
`live streaming video from the road. What’s clearat this point in the evolution of the music
`businessis that there is no clear business model. In the internet age, selling recorded
`music has become as much of an art as making the musicitself.
`
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`All of this makesfora tall order, but if history is any guide, music consumersusually get
`what they want.
`
`Free music makesthe network wealthy
`
`As researchers look back onthefirst decade of the 215t Century, many will no doubt point
`to the formative impactof file-sharing and peer-to-peer exchange of music on the internet.
`
`https://www.pewresearch.org/internet/2009/06/1 5/the-state-of-music-online-ten-years-after-napster/
`
`2/15
`
` &
`
`

`

`12/27/21, 11:12 AM
`
`The State of Music Online: Ten Years After Napster | Pew Research Center
`
`Distributed networks of socially-driven music sharing helped lay the foundation for
`mainstream engagementwith participatory media applications. Napster and other peer-
`to-peer services “schooled”usersin the social practice of downloading, uploading, and
`sharing digital content, which,in turn, has contributed to increased demand for
`broadband,greater processing power, and mobile media devices.
`
`Internet scholar Lawrence Lessig has even gonesofar as to argue that music was the most
`importantcatalyst to early adoption of the internet. As he notes in Free Culture, “The
`appealof file-sharing music wasthe crack cocaineof the Internet’s growth.It drove
`demandforaccessto the Internet more powerfully than any other single application.” 2°
`
`Media analysts now broadly use the term, “Napsterization” to refer to a massive shift in a
`given industry where networked consumers armed with technology and high-speed
`connectivity disrupt traditional institutions, hierarchies and distribution systems. And in
`many cases, those consumers have cometo expect that a digitized version of a product—
`such as news, movies or television shows—should be available online forfree.
`
`Yet, the current reach of this Napsterization effect extends far beyond the media industry;
`patients are sharing peer-to-peer expertise on coping with medical conditions and are
`engagedin efforts to gain free access to vaulted personal health records,citizens are
`networkingto increase oversightof politicians and are demanding unfettered access to
`governmentdata. Even online daters—oneof the few segmentsof the internet universe
`willing to pay at the gates of the walled garden—are circumventingthe paid services and
`connecting directly via free social networkingsites.
`
`Partyinglike it’s 1999—until the subpoenas comein
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`Musiccritic Sasha Frere-Joneshasreferred to the plight of the music industry as the
`“canary in the economic coal mine,”citing it as “a small example of the enormousfinancial
`buckling that is now global.”2*If the music business wasthe canary, then the MP3 wasits
`carbon monoxide, choking an industry that had built its empire on the clean, regulated air
`of analog music products. First, music wentdigital. Then the MP3 compression format
`shrunkthose big musicfiles into transportable size. After that, there waslittle hope of
`record companies makingit out of the mine without someserious lung damage.
`
`Napsterarrived at a time whentightly controlled access to new music wasstill the norm.
`While online radio stations were starting to flourish, music lovers were becoming
`disillusioned with the homogenizingeffects of terrestrial radio consolidation that was
`enabled by the 1996 TelecommunicationsAct. Their frustrations were made clear when
`the Federal Communications Commission reviewedthese rules in 2003 and opened them
`up for public comment. The FCC received more than 15,000letters, emails and other
`
`https://www.pewresearch.org/internet/2009/06/1 5/the-state-of-music-online-ten-years-after-napster/
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`12/27/21, 11:12 AM
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`The State of Music Online: Ten Years After Napster | Pew Research Center
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`million units, down 85% 14% from 500.5 million in 2007.28
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`Andwhile digital album sales actually increased 32% during the same period—to a record
`65.8 million units—theywerestill dwarfed by the 362.6 million physical units sold. Pew
`Internet Project data echoes these findings; the market for digital musicisstill in its
`infancy, and those who do continue to buy musicstill overwhelmingly choose CDs.
`According to our 2008 “Internet and ConsumerChoice”report, just 13% of music buyers
`say their most recent music purchase wasa digital download.2*
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`At the sametime, unauthorizedfile-sharing venuesarestill firmly rooted in the online
`music world. In a recent Pew Internet Project survey, 15% of online adults admitted to
`downloadingor sharingfiles using peer-to-peer or BitTorrent.22 Globally, estimates from
`file-sharing research firm Big Champagneplace the P2P universe at more than 200 million
`computerswith at least one peer-to-peer application installed, and operators of the
`popular Pirate Bay torrent tracker have identified more than 25 million “peers” who have
`
`https://www.pewresearch.org/internet/2009/06/1 5/the-state-of-music-online-ten-years-after-napster/
`
`5/15
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`

`

`12/27/21, 11:12 AM
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`usedtheir site alone to exchangefiles.°+
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`And amongthat 13% of music consumers whodopay for downloads, there’s no doubt that
`the eight-year-old iTunesservice continues to dominate the market. Yet, as robust as the
`iTunescatalog may be,there arestill surprising holes in the store’s offerings. Popular
`artists such as AC/DCstill do not have licensing deals with Apple, and manyolder albums
`from independentartists like Silver Sun have never madeit to iTunes’digital shelves.
`Musicfansin search of these recordingsarestill more likely to find them on peer-to-peer
`networks,torrent trackers, and eBay.
`
`Andthenthesuits droppedtheirsuits...
`
`Until recently, every frustrated fan who turned to unauthorized sources to acquire and
`share music faced the prospectof a lawsuit from the Recording Industry Association of
`America (RIAA). The industry’s legal battle against individualfile sharers spanned roughly
`five years, targeting more than 35,000allegedfile sharers in the U.S.22 However, at the
`end of that costly campaign,the challenge of plugging the P2P hole proved to be
`insurmountable, andcritics largely viewed the litigation as ineffective.°° In the latest issue
`
`https://www.pewresearch.org/internet/2009/06/1 5/the-state-of-music-online-ten-years-after-napster/
`
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`12/27/21, 11:12 AM
`
`The State of Music Online: Ten Years After Napster | Pew Research Center
`
`Artists’ varied views on the impactoffile sharing were also documentedin Pew Internet’s
`“Artists, Musicians andthe Internet” report from 2004.44 While mostartists we
`interviewedbelieved that unauthorized onlinefile sharing was wrong,few felt the industry
`wasin peril because of the networks. Whenasked aboutthe threat peer-to-peerfile-
`sharing posedto creative industries at the time, two-thirdsofartists said the activity posed
`only a minorthreat or no threatat all to them. Further, there were some major divisions
`amongthem about what constituted appropriate copying and sharingofdigitalfiles. Yet,
`amongthose who wereboth successful and struggling, the artists and musicians we
`surveyed were morelikely to say that the internet had madeit possible for them to make
`more moneyfrom their art than they were to say it had madeit harderto protect their
`workfrom piracy or unlawful use.
`
`DoneRestricting Music: The end of DRM andthe future of music
`online
`
`The success of the Radiohead andNineInch Nails experiments would be the prologue to
`an industry-wide looseningof the ties arounddigital distribution. Shortly after the RIAA
`had announcedtheendto its litigation against individual file sharers at the end of 2008,
`iTuneshalted the sale of music bundled with “digital rights management”protection.
`
`Digital rights management (DRM)has beendefined by the Federal Trade Commission as
`“technologies typically used by hardware manufacturers, publishers, and copyright holders
`to attempt to control how consumersaccess and use media and entertainment content.”
`DRM has madeits wayinto everything from cell phonesto in-flight entertainment
`
`Andnow,while it’s hard to argue at present that the industry as a whole didn’t suffer some
`serious losses due to Napster andits progeny, it’s also hard to ignore those artists who
`have benefited from theshift in distribution and promotion that has emergedpost-
`Napster. Megaband Radiohead launched one of the bolder experiments to date, self-
`releasing its “In Rainbows” album on October10, 2007 for download from their website
`under a “pay what you can” model. So far, the album hassold over three million digital
`and physical copies—morethan each of their previous two albums. Similarly, the band,
`Nine Inch Nails,self-released their, “Ghosts I-IV” album in March of 2008in a variety of
`formatsonline. In additionto free files which theartists directly uploadedto file-sharing
`networks themselves, the band offered a $5 digital version and premium packages
`(including various limited-edition physical merchandise) that generated $1.6 million in
`just over a week’s time.* And althoughthe entire album wasavailable for free through a
`Creative Commonslicense, it eventually becamethe bestselling MP3 album at Amazon for
`all of 2008.43
`
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`https://www.pewresearch.org/internet/2009/06/1 5/the-state-of-music-online-ten-years-after-napster/
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`12/27/21, 11:12 AM
`
`The State of Music Online: Ten Years After Napster | Pew Research Center
`
`systems. Many consumershave encounteredtherestrictions firsthand when trying to
`make copies of purchased music or transfer songs to mobile devices.
`
`This belated embraceofthe infinitely shareable musicfile comesonly after lots of clumsy
`dancing with DRM. Forevery new copy protection schemethat has emerged,there have
`been hundreds,if not thousands, of hackers waiting in the wings to expose the
`technology’s flaws and sharetheir discoveries with the world. One of the most famous
`hacks in music DRM history involved nothing more than the use of a Magic Markerto
`disable the copy protection built into CDs.“° And while DRM-protected music undoubtedly
`became more sophisticated over the years, it remained a toughsell to consumers when
`unauthorized copies of songs unfettered by DRM wereso widely available for free.
`
`Apple’s iTunes music service pioneered the widespread use of DRM that came bundled
`with the purchaseof individualdigital musicfiles online. Amongthevariousrestrictions
`embeddedin thefiles were limits on the number of computers that could play the songs
`and the kindsof software and portable devices that could be usedto listen to the music.
`Theserestrictions and assurances