The InsiderOne Daily Report

  Friday, February 22, 2001

A File-Sharing Pandora's Box

InsiderOne's Michael Goldberg writes: The corporate music business is run by arrogant fools. Each day it continues along with blinders on, stubbornly sticking to outdated ideas about how the music business should work; meanwhile, the grave it's been digging for itself gapes wider and deeper, a black hole into which it will soon vanish. Never before have so many music lovers rallied around a single company in such a proactive manner. Now Napster comes to the corporate-fools brigade with an offer: A billion dollars to be split among the five mega-companies over a five-year period, in exchange for use of their songs. And what is the response? AOL Time Warner designated fool — oops, I mean AOL Time Warner co-chief operating officer Richard Parsons, who proved his crystal-clear understanding of the new (digital) world in his speech at last year — says his company won't consider new business models from Napster until that company shuts down its current free service. Napster, of course, is trying to save its own ass and doesn't want to lose momentum (or its user base) by shutting down. It would prefer to transition to some kind of subscription service. But the self-interest is enlightened here — Napster's also offering the corporate music business a life raft. Right now, as many have noticed, most people interested in getting mp3 files go to Napster. If Napster is shut down, tens of millions of tech-savvy music fans will seek out the alternatives. An uncontrollable, underground black market in song files will blossom and flourish. There are young programmers out there who will make Shawn Fanning look like an amateur. Just imagine how inspiring Fanning's accomplishments to date must look to the smart young programmers currently in college. Those hotshots would like nothing better than to develop the tools to take file sharing to a whole new level while destroying the corporate music business. If the corporate drones who control the music divisions weren't so goddam full of themselves, they would look at Napster as a golden opportunity to evolve. That is what Bertelsmann AG recognized, and why it is already in business with Napster. But unless at least three, and probably four, of the five play ball, there won't be a rich enough catalogue of high-profile artists to make a subscription model appealing to music fans. Perhaps Parsons' comments to the Wall Street Journal the other day (as well as Recording Industry Association of America president Hilary Rosen's needless public slagging of the Napster offer) is just a negotiation tactic. But I doubt it. If a billion split five ways isn't enough (and perhaps it isn't), there are certainly ways to structure a deal that can work for both Napster and the music corps. If something isn't worked out, no one should be surprised when the lid to the file-sharing Pandora's Box is blown off its hinges. If it isn't already.

Datastream: The new Spoon album, Girls Can Tell isn't officially due until March. Guess what? It's already in Bay Area record stories. From the dope cover art (a record spinning) on the outside to the glorious power-pop on the inside, you are advised to seek this album out. Like right now. ... Fans of both '60s "girl group" rock and punk will appreciate Miss Ludella Black's She's Out There on the Damages Goods label, which mixes covers of songs first sung by the Troggs, the Shangri-Las, Brenda Lee and Irma Thomas with originals by Black's guitarist, Micky Hampshire. ...

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Michael Goldberg is the president of He founded Addicted To Noise in 1994.

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