The customer is always right?
Wrong, says the music industry.
The clerk at the record store won't tell you, but when you buy your first CD of this New Year, you will have enlisted in a war. That's because one of the most powerful organizations in the U.S. marketplace -- The Recording Industry Association of America (RIAA) -- has declared war on you, the consumer. Right here on American soil.
The shot heard round the world was fired on July 27, 2001 when a U.S. judge successfully shut down Napster, the most successful file-sharing service in history which had attracted an estimated 50 millions users looking to download free music onto their computer hard drives. Propaganda followed the decision. The music industry and the mainstream media claimed the court decision was the death of free music. But the excitement that Napster had created, energized and expanded by the exchange of ideas and sounds, was not destroyed. Six months after the Napster ruling, the online music file-sharing community has completely regenerated, finding refuge in programs like MusicCity's Morpheus, Grokster or KaZaa, building significantly large file-sharing communities. In the month of August, WebNoize, a leading (yet as of December 3, inoperable) Internet entertainment industry news and research firm reported that the leading Napster clones had helped users to download 3.05 billion music files. At the height of Napster last February, Napster reported 2.79 billion files. In October, MP3 Newswire.net reported that Morpheus and KaZaa pulled in 1,698,291 and 1,158,607 files respectively.
Much to the RIAA's distaste, the Napster closure has done little to stop the growth of file trading. John Vanderslice isn't surprised. As a matter of fact, the San Francisco-based indie musician, recording studio renaissance man and online music enthusiast saw it coming. The first casualty of the war fell right in his very backyard.
John Vanderslice is a modern day music innovator, an individual who circumvents any need for RIAA's membership or legal tour de force. On his own, he has released two critically acclaimed solo releases on Seattle's Barsuk Records (Mass Occult Suicide Figurines in 1999 and Time Travel is Lonely in 2001) and currently is finishing a third set to release in the spring. He recently recorded and toured with indie rock saviors Death Cab for Cutie for their latest release, The Photo Album. Before his solo status, Vanderslice was the frontman for the San Francisco indie pop-rock outfit MK Ultra, a band that made its national splash as the opening act for Sunny Day Real Estate on two separate national tours.
But Vanderslice might be best known as the owner of the 1,700 square-foot analog recording studio Tiny Telephone, located in San Francisco's Mission District. Since its inception in 1997, Tiny Telephone has turned into one of the city's recording hubs, boasting clients such as Beulah, Creeper Lagoon, Richard Buckner, ex-Pavement player Scott Kannberg, Death Cab for Cutie and respected producers like Jawbox and Burning Airlines' J. Robbins and Shellac's Bob Weston.
With all the incredible recordings happening at Tiny Telephone, Vanderslice saw an opportunity to further promote the musicians recording in his studio via the Internet. While the debate over MP3 was just beginning to heat up, Vanderslice convinced (through shear annoyance, he jokes) several artists to post songs on his Tiny Telephone website. Eventually, Vanderslice was able to convince enough artists that www.tinytelephone.com became a bona-fide MP3 hub. Vanderslice also posted one of his solo releases in its entirety.
"For me, the main thing was that there were some kind of rare and out-of-print and promo CDs that I had a hold of that I just couldn't believe were not available to people, especially responsibly encoded. It seems like a lot of people don't really care about how this stuff (MP3s) sound. This Spoon promo CD, no one has heard these songs. They're not being sold, but they really should be out there. This Jeremy Enigk (Sunny Day Real Estate) solo demo should be out there. This stuff is history."
Last year, Vanderslice had the distinction as one of a long list of musicians called to give a deposition on the effects of file-sharing program Napster. In his statement, Vanderslice claimed that it was in his best interest as an independent musician to give away his music. At the time, Vanderslice was getting almost 6,000 hits a day on his Tiny Telephone site. "I've found it to be a huge promotional tool. I know it sounds counterintuitive to put up an entire album on the Internet. But the truth is, it has helped me promote myself and sell a few albums that I would have otherwise not." In the months following the Napster shutdown, Vanderslice says his Tiny Telephone has still averaged over 100,000 downloads a month.
Reflecting on the Napster situation, Vanderslice feels little sorrow for the company. The company's error, he says, was apparent from its initial structure, one that both potentially alienated independent musicians and labels, as well as powers-that-be in the recording industry. "I wasn't really excited about Napster specifically, because they were eventually going to be a profit-making company - I always had problems with them having venture capital money and a business plan that was set up to make money. The fatal flaw in Napster -- just like in Gore asking 7 counties to recount -- is you have to be philosophically consistent. I don't think that Napster had it right by trying to make money off this seemingly open-source model. That was ridiculous. For me, [the Napster case was about] how digital information on the Internet is going to be regulated and what the U.S. government's position, involvement, interest and energy level is going to be on these kinds of things. I don't want the government to regulate any information on the Internet. It's going to be restrictive and it's just going to give more power to the five or so companies that are already running everything in the music business."
The frustration for Vanderslice and millions of online users is that since the inception of music file sharing on the Internet, they have each testified to listening to more music, a wider range of artists and buying more CDs. Even record shop owners have said that their sales have increased since the advent of file sharing. What's more, they've noticed more and more requests for rarer music and special orders that cost more.
"I definitely buy less CDs now that I don't have Napster running everyday. There's absolutely no doubt about that, because I was in a frenzy when someone would say...'hey, have you ever heard The Shins?" And I say, 'oh no,' and run home and download them and then go out and buy the CD."
With such support, one would think that the music industry would be ecstatic at such broad musical revelations. The harsh reality is that the most powerful forces in the U.S. music business -- those same individuals who proudly claim that they spend 365 days a year looking for the newest and most innovative talent -- really don't want you to expand your musical horizons. They want you to buy their music, not rare releases or indie projects from some kid with a funny name like Vanderslice who thinks he can just do it himself.
The Revolution Will Not Be Digitized
That message seemed to echo through the halls of a San Francisco courthouse when attorney Russell Frackman spoke of the Recording Industry Association of America's accusation that the file-sharing service Napster was encouraging an unregulated and illegal online trading bazaar. More than 1,400 songs per minute were being downloaded via Napster's software, argued Frackman. "Napster is attempting to build a user base to control digital distribution," said the attorney. "It is the most egregious case of massive copyright infringement that has ever existed."
The courts agreed. On July 26, U.S. District Judge Marilyn Hall Patel said that Napster was encouraging "wholesale infringing" against the recording industry copyrights. Noting that more than 70 million people would be using Napster by year's end, Patel ordered Napster shut down by midnight, Friday, July 27, 2001. The company that single-handedly introduced the phenomenon of file sharing to the general public and revolutionized the future distribution of music was paralyzed. After the ruling, Larry Iser, an intellectual property attorney stated, "all of this litigation is really setting the groundwork for what is going to be the future of the Internet."
But the digital music groundwork is far from settled. The media claimed that Napster represented the music industry's biggest victory in keeping control of its interests, but the decision signaled the industry's first battle cry against the consumer. Somehow, everyone seemed to overlook the fact that on July 27, the music industry essentially called 50 million users of the Napster service -- 50 million of their potential consumers -- "digital pirates."
Ironically, if the music industry had opened itself up to the possibilities of file-sharing technologies early on, there might never have been a Napster case, let alone a Napster. Webnoize said in the mid-'90s that it would fully catalog the music industry's artists online. The offer was good for all the big five: Sony, Warner, BMI, EMG and Universal. But the RIAA refused. During the Net's infancy, cyberspace was a refuge for a relativity small number of computer enthusiasts. The music industry figured that as long a just a few people were online swapping music files, they could afford to ignore them. And they did exactly that.
The late '90s brought advances in hardware and software well beyond the expectations of Internet enthusiasts, let alone the music industry. When services like Napster provided a forum for people to meet and share music, the suddenly immense online population began exchanging files with an unexpected fervor. The Internet and file sharing became a music lovers' dream and the music industry's nightmare. Everything from the latest chart-topping release to previously unreleased rarities was available for free, pulling in millions of music enthusiasts.
After the Napster service grew to 40 million users in the fall of 2000, the music industry could ignore the emerging services and technology no longer. Years behind in the game, the music industry decided it couldn't afford to embrace the millions of file swappers and the potential revenues they represented. Instead, they organized their lobbying and legal powers to begin an all-out attack on the Net and its users. They shut down Napster. They strengthened copyright laws. They blocked software developers and prosecuted a few select individuals to show their willingness to fight and resist digital music, not embrace it. The music industry did everything it possibly could to keep the status quo.
Not only has the post-Napster file-sharing community grown, it has given rise to much larger challenges for the music industry. Ironically, the Napster ruling shifted users to true peer-to-peer networks like MusicCity's Morpheus and KaZaa, which are designed to be more challenging -- both legally and theoretically -- for the music and entertainment industry to shut down.
The movie industry joined the digital file-sharing battle in early October, when the RIAA and the Motion Picture Association of America (MPAA) filed joint suit against programs Morpheus, KaZaa, Grokster and FastTrack technology for copyright infringement. The MPAA joined the fight because the FastTrack technology that each of these Napster clones uses also trades movie files.
The difficulty for the RIAA and MPAA is whereas Napster had several centralized servers in their San Francisco-based headquarters that assisted with exchange of files, the Napster clones and the FastTrack technology operate without a centralized server. Hypothetically, if the parent company is shut down, file trading can still continue amongst users with the software already installed on their computers. Also, most of the parent companies are overseas, free of the perils of U.S. copyright laws and courthouses. FastTrack and KaZaa originate from Amsterdam and Grokster's headquarters are in Nevis, a small island in the Caribbean. MusicCity has operations headquartered in Tennessee, but even if the entertainment industry succeeds legally, the core of the business originates from foreign countries. A copyright victory in U.S. courts would only push file-swapping entities further underground or to countries free of such restrictions.
The RIAA sees it much differently. "We cannot sit idly by while these services continue to operate illegally," said RIAA Chief Executive Hilary Rosen at the time. "Especially at a time when new legitimate services are being launched."
AOL's MusicNet, which debuted last month, is one of the legitimate subscription music services that the RIAA seeks to protect. MusicNet's service costs $9.95 a month, but it represents nothing more than the music industry's status quo in sheep's clothing. There's a monthly limit on downloads, and several technical restrictions that keep users from burning select files to CD. Even more, MusicNet only offers music from three of the five major labels, without a trace of independent releases. Is this really the best that AOL or the RIAA can offer? If they believe MusicNet to be a viable source to wean millions of file swappers from unlimited, and possibly illegal, downloads from a larger user base, they have a lot of work ahead.
Vanderslice says the larger implications of the battle over digital music lies in the RIAA-backed bills like the Security Systems Standards and Certification Act (SSSCA), proposed by South Carolina Senator Fritz Hollings. The bill would make it a civil offense to create or sell any kind of computer equipment that "does not include and utilize certified security technologies approved by the federal government." It also creates new federal felonies, punishable by five years in prison and a fine of up to $500,000 for anyone who distributes copyrighted material with "security measures" disabled or has a network-attached computer that disables copy protection. In short, all consumer electronics in the U.S. would come with anti-piracy technology built in.
"What they're trying to do now is to make every digital device have some sort of copyright protection," erupts Vanderslice. "They want every CD now to be unrippable. They're trying to make it where there's no copying of information at all by digital devices." The Digital Millennium Copyright Act, passed in 1998, basically said if you put any technological protection around your content, you then have total control of it. No one, by law, is allowed to crack or tamper with the technological protection device. Vanderslice calls such bills a "total sham."
It's a bigger sham than Vanderslice might have imagined. "The record companies are pursuing two goals at once [with the SSSCA proposal]," says Salon.com writer Paul Boutin in his recent article "Don't Steal Music, Pretty Please." "Long term, they need to come up with a way to sell music online that consumers will buy into. In the meantime, they are desperate to keep the entire store from being pilfered."
Jim Griffin, the CEO of Cherry Lane Digital, a company that handles rights management for songwriters, reflected the statement in Boutin's article, saying that anti-theft devices are nothing more than a way to keep the rest of us of occupied until the big-time players can agree on a cash-flow model for downloadable entertainment. "There may be a division of Sony building encrypted players in all earnestness. But there's no way that the heads of the company believe that's their long-term strategy. So much of this DRM [digital rights management] stuff is just sending husbands out to boil water while the wives have the baby."
There's a good chance that the music industry is trying to fool the public with anti-theft smoke and mirrors, because they know that the SSSCA bill and others like it are theoretically impossible to carry out.
Last year, The Secure Digital Music Initiative (SDMI) -- a forum of more than 160 companies and organizations representing a broad spectrum of information technology and consumer electronics businesses -- offered a public challenge to break the security of four music clips on the Internet encrypted with anti-theft technology, without compromising the audio quality. Edward Felten, a Princeton University professor, and graduate student Scott Craver were able to easily render all four watermarks undetectable. "We believe that consumers who buy into this technology have a right to know whether or not it works," said Felten. "One of the things that we discovered in doing our research is that this technology in fact is not going to work. We found in our study that it was fairly easy for someone with a moderate level of technical sophistication to break this technology. It's clear that this technology has serious flaws."
The Modus Operandi
So what does it all mean? File trading is the largest grassroots campaign in the history of the world. When 50 million users united last February on Napster, it served as an unequivocal message to the music industry that consumers are tired of the music industry status quo. They do not agree with the inflated $20 price tag for a CD. They do not agree with paying $40 to see a Linkin Park concert. The largest grassroots effort in the history of the world clearly stated that consumers are tired of the music industry's Orwellian control over what is popular, and how much it should or should not cost.
To Vanderslice, pricing is the central theme to the entire debate. "The big question here is that if a record is priced too high, then yes, people are going to spend an hour to download Radiohead's Amnesiac and burn it to a disc correctly. Maybe the price of the CD is too high? I mean really, if they're going to spend an hour to totally inconvenience themselves, then maybe the price of a CD is artificially inflated or absurdly high and is in need of some sort of price correction. Maybe this whole thing isn't the fault of the Internet?"
Webnoize reported in June of 2001 that the average person purchases six CDs or $90 worth of music every year. What that number should tell both consumers and the music industry is that the average person has to be extremely selective in what they chose to purchase. "With all the artists, and singles, and albums, and music videos, and concerts, and radio play and soft drink tie-in promotions that we are bombarded with every year, all we find room for is six CDs," wrote Webnoize columnist Richard Menta just weeks after the Napster decision in his article "6 CDs a Year." "Out of the top 10 albums every year the average person, at best, will own only six of them and that is at the exclusion of the additional work of the thousands of other artists out there."
Ding, ding, ding! We have a winner. At the average cost of around $18, the music industry has inflated prices such that consumers have to be selective. And to be really selective, to go out and find those six albums that add variety to your music collection you have to abandon the traditional formats that the music industry and the five big record labels incessantly push down your throat. File-sharing formats have expanded the average person's music palette to include the thousands of other artists -- like the John Vanderslices -- from which the average consumers purchase their six CDs a year. These artists don't have soft drink tie-in promotions, MTV videos or even radio play in most markets. And most central to the issue, they are artists who don't put money in the pocket of the RIAA or its members. "I think CDs will continue to sell around the six-per-person-per-year pace because the medium is not yet ready to be replaced by the consumer with another," adds Menta. "It is mostly just being supplemented."
But the music industry continues to see it much differently. So in the total absence of any other way to protect their interests, they have had to declare war on you, the consumer. And throughout it all, the music industry relied almost solely on the RIAA's leadership, which has led to plenty of litigation and very little R & D. "Being essentially a legal group, RIAA's concentration was on litigating and lawmaking, rather than research or development that might create new models," said John Alderman in the book Sonic Boom, chronicling the history of digital music. "Preserving the status quo of the non-digital world was the goal, unless expanding members' rights was an option."
Vanderslice and millions of music and Internet enthusiasts also see it as another case of the rich getting richer, and the common man -- the Net's truest innovators, visionaries and leaders -- again falling victim to corporate greed.
"It was high time that all these issues were reevaluated in the digital age, but so far everything -- all legislation that's getting passed from my point of view -- is skewed towards the benefit of a few multi-national corporations, while indie musicians and consumers are getting screwed. The [RIAA and other supporters of such legislation] benefit from the flexibility of re-evaluated copyright legislation. Right now we're getting the short-end."