among fans and musicians—unambiguous blessings for music itself. But such success is still set against the backdrop of an industry struggling to maintain control and remain relevant. Over the greater part of the last century, the entities that would come to be the big five record labels—Warner, Universal, BMG, Sony, and EMI—crafted elaborate distribution pipelines to generate and safeguard hefty revenue by combining street smarts, cultural savvy, tough-guy tricks, and crafty legal maneuvering with keenly developed business sense. It’s only recently that they were settling into the more regular life of multinational corporations. Now these companies and a few others confront the greatest challenge of their history. They find themselves in an environment in which their chief commodity is not just easily converted into digital code—ripe for limitless copying and dissemination—but also is spread via a worldwide network that dwarfs anything that came before it. While innovators speculate about the benefits to human progress a free-flowing pipeline of information brings, the music industry has plenty of reservations: It was banking on its control of songs that have now become seductive little packets of freely traded digits.
Visit a college campus almost anywhere in America, and you’re sure to find two things: computer networks with high-speed, high-bandwidth Internet connections, and music fans who have amassed large collections of music without ever buying tapes, CDs, or records. Instead of trips to the record store, many simply download the songs they want from a school network, or hook up with fans elsewhere, trading songs with Napster or its many clones. Go to a record company in Manhattan or Los Angeles, and you’re likely to find two things: executives with great resistance to technological change and someone in the IT department who avidly follows online developments and may have even accumulated a collection of MP3s. This situation seems so pervasive that it has replaced the old stereotype of the A&R staff asking the mailroom clerk for tips about which new bands are hip.
The big-record-label-dominated music business that developed in the last century is now under assault by successive waves of young techies such as Napster’s Shawn Fanning and Gnutella creator Justin Frankel and their tsunami of followers. These arbiters of innovation share several traits, namely technical ingenuity and priorities that fall polar opposite to traditional business. A half decade ago, when the Web was in its infancy, it was popular to say that programmers were the new rock stars. Despite a few renegade cyberpunk coders sporting leather pants and mirrored sunglasses, the notion quickly faded as the reality of a high-tech workforce became more mundane. But looking at the innovation and bravado of the young people who have brought such a dramatic crisis to the music business, it’s easy to see some truth in the old statement, particularly when these visionaries are contrasted with the current crop of top-selling artists. The challenge to the old guard that the young coders present seems more fundamentally unsettling than most rock and roll these days, and their rebellion seems more genuine and more compelling than the packaged and exaggerated posing of record industry poster boys.
Technology brings power, and the level of technology now in the hands of individuals will present challenges to everyone with a vested interest in the status quo. In response to those challenges, government and corporations may overstep acceptable boundaries and seek to infringe on the rights of individuals whose protections as citizens should come before their roles as consumers. Music distribution on the Internet is interesting because it is showing, to anyone paying attention, how things might progress in many other industries, particularly those with a product that can be digitized. That the MP3 format is a subset of a standard meant for the compression of movies is a glaring clue as to the next big industry likely to be touched by the mercurial hand of the Net.
The music industry has a long history of legal skirmishes with the inventors and builders of new music players. The audiocassette and digital audio tape (DAT) are two recent examples that seemed to work out advantageously for the music business. In the 1980s, when cassette tapes were the latest threat to copyright holders, legislators granted music labels a portion of every sale of blank tapes. The industry later that same decade worked to kill DAT as a consumer format with threats of lawsuits. Digital tape was able to record at higher fidelity than CDs and wouldn’t degrade with each generation, so it was feared as the perfect medium for bootlegging. But because of high cost resulting from fewer machines, demand for DAT never spread much beyond dedicated concert tapers and musicians.
With the right software, personal computers are now able to do anything that DAT players can, and they have proven very hard to regulate. Software and hardware makers have the economic and growing political power to compete with the music industry, so they’ve been able to stave off most of the industry’s legal assaults. But when the makers of new technologies are only sometimes corporations—and are often just a kid in a dorm—the equation changes remarkably. Because new players, and new methods of distributing what’s played, exist as code, manufacturing and retailing are un-needed. That leaves ample room to innovate without some of the traditional business, financial, and legal obstacles (and without their protections). A good new product, especially if the creator is not so interested in remuneration, could be released in one day, and by the next week there might be a million copies in circulation worldwide. The MP3 world is filled with software that has been distributed in such a way. On the music side, legally or not, a popular song follows the same lightning path. Bootlegged songs from Radiohead’s Kid A were downloaded by millions of Net users before the album was officially released. Smashing Pumpkins broke with its label, Virgin, and gave away the group’s final album for free distribution on the Net. It met a similarly massive response.
The groundbreaking ability of people across the planet to freely share information is changing the world and our culture, and this presents a scary prospect for those hoping to make money in exchange for the time and resources invested in producing and marketing to that culture. If a band and its producer are accustomed to spending a year and several hundred thousand dollars recording and touring to promote a record, it’s easy to see how they might fear the new ability of anyone to send a copy of whatever they like, for free. Unlike illusionary changes in styles and personae, or even corporate acquisitions and mergers, this fundamental shift changes even the form that music takes. Digital distribution means that music is no longer tied to an object such as a record, tape, or CD, but becomes, as it is being shared and consumed, something more ethereal. Depending on how you look at it, in the online world, music has been either stripped or liberated from its body; only its soul remains, its digital code. If a record company has spent millions to develop and control the works of musicians, banking on their value as consumer goods—marketable, singular objects—company officials might be shocked to discover what they hope to sell and control has become pure information, flowing freely around the globe.
While the record companies and the Recording Industry Association of America (RIAA) dominate media reports and courtroom dramas, musicians themselves have been polarized by online music. Metallica’s Lars Ulrich raged against online traders. But archly anti-establishment bands like the English Chumbawamba have seized the moment to air long-standing grievances: Despite their high-minded talk, most record companies “wouldn’t recognise art or artistic integrity if it bounded over and bit them on the arse,” Chumbawamba vocalist Dunstan Bruce said on his band’s Web site. “The real truth is that record companies have been screwing the public for years and they’re now terrified that they might lose the odd dollar here and there.” Nor is it simply the outsiders or the more usual publicity seekers like Courtney Love who have found something to say. Elton John struck a tone similar to Love’s anger at the industry at a press conference. The Who’s Pete Townshend (also using his own Web site to send a message) wrote that the first thing that struck him when he went online with Napster and found “such a lot of stuff” when he searched on his name was “hooray—at last I might as well say fuck BMI.”
If it looked as if the labels were paralyzed by a financial interest in the status quo and were ignoring a larger, developing picture, other businessmen followed the money to seek common ground with Napster, the most feared, most popular of the online predators. Just as urgently as most music industry executives sought to kill their online adversaries, or at least subdue them as they did the cassette tape, other business leaders were stalking something much bigger. For a mere $50 million, the same amount he invested in 1994 when he struck gold with a budding AOL, Bertelsmann’s Thomas Middelhoff helped out an embattled Napster, hoping to buy into the future. Going over the head