by Mary Madden, Senior Research Specialist, Pew Internet Project
At the ripe old age of 10, the current incarnation of the Napster music service scarcely resembles its former bawdy self. If the original Napster was a loud, raucous garage band made up of drunken college students, the present offering is what happens when the band sobers up, signs to a major label and starts house hunting.
Long gone are the days of free-flowing music from the vine of central servers. Today’s Napster requires a grown-up kind of commitment: a credit card and a monthly subscription. It also faces stiff competition; while Napster morphed from its lawless larval stage to a dues-paying music service, consumers in search of free content have had their pick of surviving peer-to-peer applications and torrent sites that more than make up for the loss of the original rogue website.
The current economic climate makes music an even tougher sell. In today’s economy, how do you compete with free? While it may seem counterintuitive, some experts see consumers’ insatiable appetite for free content as an opportunity rather than a cause for concern. Chris Anderson, author of The Long Tail and editor in chief at Wired ignited a fiery debate among the technology and entertainment community recently when he published an article touting free content as the key to earning income in the digital age. His article, titled, “Free! Why $0.00 Is The Future Of Business,” argues that when digital content approaches zero marginal cost to distribute, the more you give away for free, the more you can sell to the small segment of consumers who are willing to pay for premium content.
For some artists, Anderson’s scenario translates into giving away the entire album for free in hopes that fans will pay for concert tickets or limited access to live streaming video from the road. What’s clear at this point in the evolution of the music business is that there is no clear business model. In the internet age, selling recorded music has become as much of an art as making the music itself.
While the music industry has been on the front lines of the battle to convert freeloaders into paying customers, their efforts have been watched closely by other digitized industries — newspapers, book publishing and Hollywood among them — who are hoping to staunch their own bleeding before it’s too late. And if the music market is any indication of how consumer expectations will evolve elsewhere, the demands for free content will extend far beyond the mere cost of the product.
In the decade since Napster’s launch, digital music consumers have demonstrated their interest in five kinds of “free” selling points:
- Cost (zero or approaching zero).
- Portability (to any device).
- Mobility (wireless access to music).
- Choice (access to any song ever recorded).
- Remixability (freedom to remix and mashup music).
All of this makes for a tall order, but if history is any guide, music consumers usually get what they want. And as researchers look back on the first decade of the 21st century, many will no doubt point to the formative impact of file-sharing and peer-to-peer exchange of music on the internet. Napster and other peer-to-peer services “schooled” users in 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. Further, the Napsterization effect extends to non-media areas such as sharing health information, oversight of politicians, access to government data and online dating via free social networking sites.
Read the full report on the history and future ramifications of Napsterization at pewresearch.org/pewresearch-org/internet including sections on the following:
Partying like it’s 1999-until the subpoenas come in
Music critic Sasha Frere-Jones has referred to the plight of the music industry as the “canary in the economic coal mine,” citing it as “a small example of the enormous financial buckling that is now global.” If the music business was the canary, then the MP3 was its carbon monoxide, choking an industry that had built its empire on the clean, regulated air of analog music products. Yet, in 2009, the record labels are still hanging on to their broken strings. Granted, sales for the music industry continue to decline; the latest reports from Nielsen indicated that total album sales, including albums sold digitally, fell to 428.4 million units, down 8.5% 14%1 from 500.5 million in 2007. But while digital album sales actually increased 32% during the same period — to a record 65.8 million units — they were still dwarfed by the 362.6 million physical units sold.
And then the suits dropped their suits…
The industry’s legal battle against individual file sharers spanned roughly five years, targeting more than 35,000 alleged file sharers in the U.S. However, at the end of that costly campaign, the challenge of plugging the P2P hole proved to be insurmountable. Also lost down the P2P hole was the reputation of the industry, now widely seen as one that sues its own customers and is out of step with current technology. Moreover, when artists spoke on the industry’s behalf, they didn’t always present a unified message that sharing music in any context without permission was wrong.
Done Restricting Music: The end of DRM and the future of music online
Shortly after the music industry had announced the end to its litigation against individual file sharers at the end of 2008, iTunes halted the sale of music bundled with “digital rights management” (DRM) protection, defined by the Federal Trade Commission as “technologies typically used by hardware manufacturers, publishers, and copyright holders to attempt to control how consumers access and use media and entertainment content.” DRM has made its way into everything from cell phones to in-flight entertainment systems.
Yet, for all the major changes in the industry’s tactics, the relaxed attitude only goes so far. Through digital fingerprinting and other tracking technologies, the record labels are monitoring copyrighted content as closely as ever and are counting on two major new strategies to help them: a landmark partnership with internet service providers to monitor file sharing activity and potentially cut off service to the worst offenders; a series of partnerships with universities that would incorporate music subscription fees (predicted to be less than five dollars per student) into student tuition bills. If successful, a similar ISP-based fee could be implemented for the general public.
Read the full report at pewresearch.org/pewresearch-org/internet.
1. Ben Sisario, “Music Sales Fell in 2008, but Climbed on the Web,” The New York Times, December 31, 2008. The AP article which was originally referenced here included an error in the reporting of music industry sales figures. The article referenced a decline of 8.5% in total album sales, however, the new reference points to the correct rate of decline (14%).
