A Swapping Solution in Sight?
The MP3 file sharing battle between music industry insiders and download crazed net users has come to a crossroad: Label licensed pay networks.

By Christina Capobianco


When he's not at Skidmore College in Saratoga Springs, New York, writing papers, studying for exams or getting black and blue at hockey practice, Brendan Drew spends much of his time in his dorm room in front of his computer, downloading song after song. "Anything me and my roommates can drunkenly dance to at 3 AM," as he puts it, a category that includes, Eminem, Lenny Kravitz, Dave Matthews Band and yes, even a few N'Sync tracks.

Brendan enjoys the freedom made possible by the latest digital music technology known as file sharing which enables users to exchange songs by uploading or downloading them from websites such as Kazaa, Morpheus and Xolox and the network that sparked the phenomenon, Napster. Evolving rapidly over the past five years, file sharing software has spread like wildfire across the net. Many ardent file swappers are college students, making full (if illegal) use of the high-speed connections. Provided free of charge, by their schools. A study by Mercer Management Consulting and the National Association of Recording Merchandisers, in which 1,800 college students were polled on music listening habits and found that of the 394 songs stored as MP3 files (MP3 is a codec that compresses standard audio tracks into much smaller sizes without significantly compromising sound quality.)on an average student's computer, 79 percent of those songs had been downloaded from an illegal network such as Napster. On such peer-to-peer networks, fans can share and trade as much music as they want, for free.

However, this freedom may not last long. In an effort to control the illegal distribution of music be recording artists who have not agreed to share their work for free, Pressplay (backed by Sony and Universal) and MusicNet (primary owners AOL Time Warner Inc., EMI Group PLC and Bertelsmann AG, and partner RealNetworks Inc.) have been created as alternatives to Napster, Morpheus, and other file-swapping sites. They have launched services that function much as the black-market sites, but there is one significant difference: They charge monthly subscription fees, plus an additional payment for each burned song. (Burning involves using software to convert audio CD's, tapes or vinyl records into digital formats such as MP3 or Wave Files.) Moreover, they have only a fraction of the music available to users of illegal sites.

Increasingly, record labels are hopping on the bandwagon, launching sites that adopt this design. For example, Rhapsody, the independent digital music subscription service from Listen.com, announced agreements last month that will enable CD users to burb CD's of and of the more than 75,000 tracks controlled by Warner Music Group, Universal Music Group, among others. In addition to Rhapsody's $9.95 monthly subscription fee, the site has opted for an unlimited pay-as-you-go structure, charging 99 cents per individual track --- the price that other legal services are generally charging per burn.

Paul Maloney, the editor of RAIN, The Radio And Internet Newsletter, says that "services like MusicNet and Pressplay offer a limited number of artists and songs, set limits on how much music users can download, limit the use of those downloads, limit how long a user can have the songs, (in most cases, the songs you download expire, and can't be played if you're no longer a subscriber) and according to some, they charge too much." Maloney is not blind to the benefits of legal sites, however. "pay services are a little easier to use than [illegal] services," he notes. "A lot of peer-to-peer services have been adding "spyware" to their software to secretly track what sites their users visit, then selling this information to advertisers. Moreover, the 'legit' services are typically more better written, i.e., they don't crash your computer as often, and the files you download are of excellent quality. Whereas, with the peer-to-peer services, a lot of the songs are mislabeled, corrupt, incomplete, etc."

MusicNet is just now starting to make its way to consumers through its partners AOL and Real Networks. Interestingly, MusicNet Vice President Paul Greenberg claims that the illegal networks do not pose as big a threat as one might imagine. MusicNet and services like it are not only secure, but also legal, and they hope that consumers will come to appreciate these benefits, which are lacking in the peer-to-peer experience. With licensed, legal networks, there are no surprises when downloading a song, a convenience Greenberg hopes will entice users. "We believe that consumers want an easy, high-quality way to both consume and discover new music," he says. "MusicNet provides people with an excellent service that delivers depth of content and compensates artists for their work."

Brendan Drew has his own ideas about the value compensating record artists. "How is a dollar per burn any cheaper than buying a CD?," he wants to know. "If I'm downloading 15 songs by an artist at a buck a song, it's about 2 bucks less than a CD. Then you factor in the cost of the disk you're burning it onto, and it's the exact same price. And that's without the CD case and pictures. If I wanted to spend that much on a CD, I would have bought it in the first place!" To Drew, the only benefit offered by legal sites is that, through such a service, users can make a CD that might be a mix of songs normally found on a few different albums. This advantage is still not enough of an incentive. "I don't want to waste 17 dollars on a CD when the artist makes one good song and constantly flaunts their wealth when I'm trying to pay $34,000 a year for college."

Musician Tom Petty

What record label executives would point out to Drew is that the artist is not the only person involved in making a record. Unfortunately, even outspoken artists who openly support free downloading such as Limp Bizkit singer Fred Durst, Dave Matthews, Courtney Love and most recently, Tom Petty, don't publicize this fact. In the November Rolling Stone interview, Petty declared that he thought it was, "ridiculous to make people pay twenty dollars for a CD." Many artists are as greedy as record labels, he suggested.

Artists such as Petty, who speak out in support of free downloading often write and produce their own songs. It bears noting that there are many, many songwriter and publishers supporting artists of all types who remain completely unrecognized for their work; such as those that write the hits that are recorded by some country stars.

Jeff Wood

Jeff Wood is one songwriter part of a large pool of composers in Nashville who are hired to write songs not for themselves, but for other artists. "My biggest problem with free downloading is the people that do it don't see it as stealing," says Wood. "It's hard for people to understand that [songwriters] feed their families on what they make writing songs. They work just as hard in this as any other occupation, trying to get by." Wood and his partners believe that free downloading definitely hurts record sales, which in turn, hurts writers like him, he is paid a percentage of what is known as "mechanical" royalties from album sales. According to Nielsen SoundScan, CD sales have fallen 12.8% this year, after a 10% decline in 2001. Even worse, as a result of the downloading craze, sales of singles have dropped 65.4% this year already. This is obviously not good news to Wood. "Writers spend sometimes up to a year creating a song to hopefully --- not likely, but hopefully, make some money off of it. I believe any time a songwriters creation is used for the enjoyment of someone else, the songwriter should be paid."

Would Wood's predicament be enough to motivate college downloaders to pay for their music? Drew, at least, doesn't feel his pain. "It's not something that even passes through your mind when you're downloading," he admits.

Roy Elkins understands Drew's attitude. He is the founder of Broadjam.com, a site dedicated to providing easy and affordable Web exposure for emerging artists. The site streams songs by unsigned artists and writers on demand, but does not allow sharing or CD burning. Thus, the writers and artists featured on Broadjam are able to get exposure without losing any financial benefits. "File swapping is definitely more advantageous for unknown artists rather than known artists," says Elkins. Consequently, he believes that music networks owned by record labels "have a tough challenge facing them. People who download don't feel they are doing anything unethical and will continue to do so until a mechanism is in place that will replace their current acquisition habits." But even Elkins says this is a long shot, since "by the time all the legal issues are resolved, something else will come to the forefront to usurp file sharing technology."

New technologies or not, the problems will eventually work themselves out, says Barry Scadelki, an entertainment lawyer. "The law always lags [behind] technology and has to play catch-up," says Scadelki. "Legislation gets passed, litigation follows, and the market eventually settles down." Technological measures are countered by technological end-runs around these measures, he argues. "Traffic cops get radar guns, drivers get radar detectors, cops change to lasers, drivers get laser detectors, etc." According to Scadelki, revisions of the Digital Millenium Copyright Act and other aspects of U.S. copyright law are currently in the works. He stresses that these actions are "not just from independent Internet streaming services and other commercial enterprises, but also from consumers, who want less, rather than more, restrictions in the realm of digitally distributed music and other copyrighted works." Until these new laws are put into effect, suggests Scadelki, record labels should realize that "limiting the number of streams or downloads [on their sites] does little to discourage illegal network use. The laws of supply and demand state that if consumers' needs are better met by the illegal networks, that's where they will go."

However, says Scadelki, users should recognize that creators of music and other copyrighted works deserve compensation for the use of their creations. The patterns of supply and demand hold true in the eyes of Radio and Internet Newsletter editor, Paul Maloney as well. "In the 20s, the government was almost powerless against the gangs that manufactured and sold alcohol," says Maloney. "No matter how many booze runners they arrested and facilities they smashed up, more and more popped up. They way they ended it was by making alcohol legal again. [As a result] you could buy it from legitimate businessmen, and the quality was good." Record companies could learn a lesson from the history of prohibition, he says. "If they make the music files of a higher quality, make them easier to find, inexpensive, and add other incentives for consumers to use their services, such as promotions, contests, and special "Internet-only" versions of songs, they can win the game. The labels have more money and promotional power than the illegal services will ever have." Users, says Maloney, simply want "something easy, cheap, and usable. As far as the Internet it concerned, the labels dragged their feet in meeting customers' demands. Napster didn't, and that's why everyone went there."

Rhapsody and MusicNet have predicted that, within 18 months, they will be able to offer the labels' full song catalogs online and will even obtain the rights for consumers to burn songs onto their own CDs. They claim that this would be a giant step toward changing the way the masses can access music. However, users remain painfully aware of the difference between getting something for nothing and shelling out the cash; so far, only about 100,000 people have subscribed to paid digital music services. Nevertheless, some experts believe that, as the major labels offer their own offer their own networks, the young music fans swapping free files will eventually grow up, get jobs and willingly pay for their music.

So, as the labels naively celebrate their newborn networks, songwriters like Jeff Wood are left to hope that Web savvy music lovers will stop searching for new ways to get what they want for free. Unfortunately, back at Skidmore, Drew isn't making any promises. Asked if the illegality of downloading copyrighted song weighs heavily on his conscience, Drew scoffs, "So's marijuana! So's under age drinking! Who in their right mind is going to turn down something free?"

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Christina Capobianco is a senior at NYU, double-majoring in drama and journalism.

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