Music Biz Rocks The Internet

Welcome Guest. | Log In| Register | Membership Benefits

May 23, 2000 (9:01 AM EDT)

By Rivka Tadjer,

Here's what e-business leaders should really be asking in the wake of the music industry's fight over digital copyright laws: Do companies with content to protect run to the courts for short-term protection? Or do they adapt their business models to the reality of the Internet, where content cannot be contained once it's distributed? And if users can pluck and broadcast content on a whim, what's the best way to capitalize on it?

The actual music legal battle is about whether upstart Internet company Napster is pirating copyrighted music by letting Web surfers come to its site and use its proprietary MP3-based swapping software for free to trade music like baseball cards. The Napster community has a reported 9 million members. The core issue -- and what all the lawsuits are about -- is that no one in this community is paying the record companies for these digital copies of songs.

The flaw in the record companies' legal strategy is that they're trying to contain the new technology, and it can't be contained. Historically, copyright laws followed the invention of the printing press and mass distribution. Now, technology has moved beyond society's ability to fully enforce existing laws. Ironically, it's the music industry itself that helped drive the piracy to begin with: CD-Recordables (CD-Rs) were brought to market by music-industry technology companies.

"People started bootlegging when cassettes were invented, and nothing will stop it," said Michael McDonald, a veteran musician who began his career with the Doobie Brothers and has launched a record label called Ramp Records. "The only thing now is that it will be more widespread. You can't lie awake at night worrying about that. Instead, it's time for the music industry to reinvent itself."

Ramp Records has a new philosophy and business approach to dealing with selling music: free airwave. Instead of focusing on the traditional business model of licensing content and collecting royalties for ongoing distribution, Ramp Records will take a grassroots approach. The idea is to discover unknown bands it likes, put the music online, see what catches on, produce and sell the albums online and via traditional retail outlets and, for now, not worry about how they're distributed.

Of course, it's unclear whether Ramp Records can make a go of it with a free-for-all approach and a revenue model that focuses on front-loaded payment for new music. The idea is for consumers to pay when they download a whole album, then do whatever they want with it. But Ramp Records is taking on a formidable task: building a new music business model for the Internet. They deal with the Internet as it is, not as they wish it to be. And because they have a lean operating machine that cuts out the middleman, the royalty revenue they're passing up might not be as important.

»More from InternetWeek