Business & Finance
Commentary
8/10/2007
12:36 PM
Cory Doctorow
Cory Doctorow
Commentary
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Why Is Hollywood Making A Sequel To The Napster Wars?

Shutting down Napster was a huge blunder for the record companies, leading to the collapse of the entire industry. Now, movies and TV studios are looking to repeat the failure by going after YouTube, says columnist Cory Doctorow.

Instead, Sony's portable players -- the MusicClip and others -- were so crippled by anti-copying technology that they couldn't even play MP3s, and the music selection at Sony services like PressPlay was anemic, expensive, and equally hobbled. Sony isn't even a name in the portable audio market anymore -- today's Walkman is an iPod.

Of course, Sony still has a record label -- for now. But sales are falling, and the company is reeling from the 2005 "rootkit" debacle, where it deliberately infected eight million music CDs with a hacker tool called a rootkit, compromising more than 500,000 U.S. computer networks, including military and government networks, all in a (failed) bid to stop copying of its CDs.

The public wasn't willing to wait for Sony and the rest to wake up and offer a service that was as compelling, exciting, and versatile as Napster. Instead, they flocked to a new generation of services like Kazaa and the various Gnutella networks. Kazaa's business model was to set up offshore, on the tiny Polynesian island of Vanuatu. Kazaa bundled spyware with its software, making its profits off fees from spyware crooks. Kazaa didn't want to pay billions for record industry licenses -- it used the international legal and finance system to hopelessly snarl the RIAA's members through half a decade of wild profitability. The company was eventually brought to ground, but the founders walked away and started Skype and then Joost.

Meantime, dozens of other services had sprung up to fill Kazaa's niche -- AllofMP3, the notorious Russian site, was eventually killed through intervention of the U.S. Trade Representative and the WTO, and was reborn practically the next day under a new name.

It's been eight years since Sean Fanning created Napster in his college dorm room. Eight years later, there isn't a single authorized music service that can compete with the original Napster. Record sales are down every year, and digital music sales aren't filling in the crater. The record industry has contracted to four companies, and it may soon be three if EMI can get regulatory permission to put itself on the block.

The sue-'em-all-and-let-God-sort-'em-out plan was a flop in the box office, a flop in home video, and a flop overseas. So why is Hollywood shooting a remake?

Napster: The Sequel

YouTube, 2007, bears some passing similarity to Napster, 2001. Founded by a couple guys in a garage, rocketed to popular success, heavily capitalized by a deep-pocketed giant. Its business model? Turn popularity into dollars and offer a share to the rightsholders whose works they're using. This is a historically sound plan: cable operators got rich by retransmitting broadcasts without permission, and once they were commercial successes, they sat down to negotiate to pay for those copyrights (just as the record companies negotiated with composers after they'd gotten rich selling records bearing those compositions).

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