According to the January issue of American Demographics, a magazine which hardly supports radical copyright-infringers, music sites like Napster have created "powerful new opportunities for music marketeers." Despite the best efforts of the greedy record companies and a few recording stars -- Metallica and Dr. Dre come readily to mind -- to alienate a new generation of music lovers, recent figures prove that file-sharing services actually generate sales and put more money in artists' pockets.
This has enormous implications for those making movies, publishing books, or creating any kind of saleable entertainment. It suggests that the Net may work best as a three-step process: first connecting customers with culture, then generating interest in cultural and informational offerings, then keeping track of their tastes through sophisticated new digital marketing research. Theoretically, file-sharing approaches could go beyond shopping to stimulate interest in education, business, even politics, if the music experience is any indicator. And it sure ought to be.
The relationship between new decentralized software programs -- Napster, Freenet, Gnutella, P2P -- and such issues as copyright infringement, artists rights and conventional retailing is complicated. Legal, political, educational and other institutions haven't begun to sort through them. But clearly the music industry's panicky and greedy overreaction will prove one of the most dunder-headed, short-sighted responses in recent business history. The industry couldn't have been more off-base, dishonest or greedy.
Nearly 75 percent of college students have downloaded music from the Net, 58 percent of them using Napster, according to a recent study by Greenfield Online, a Connecticut research firm, and YouthStream Media Networks. Nearly two-thirds of the 1,135 college students surveyed say they download music as a way to sample music before buying it. The proliferation of online music is introducing consumes to artists they don't know, in almost precisely the same way department stores offer samples of food, perfume and other retail items. A survey by Yankelovich Partners for the Digital Media Association found that about half the music fans in the U.S. turn to look for artists they can't or don't hear in other venues, like radio. Nearly two-thirds of those who downloaded music from the Web say that their search ended in a music purchase. Music labels should have been donating money to Napster users, not threatening to sue them and chase the site off of college campuses.
And the much-libeled Napster users are dedicated music buyers, quick to reach for their wallets. Jupiter Research says it found that 45 per cent of online music fans are more likely to have increased their music purchases than online fans who don't use Napster. The Jupiter study of Napster users found that 71 percent of users say they're willing to pay to download an entire album.
Interestingly, reports American Demographics, the Jupiter Study of Napster users found that 71 percent of those who use the site said they were willing to pay to download an entire album. But in a Greenfield Online survey of 5,200 online music shoppers, nearly 70 per cent say that they have not paid -- and will not pay -- for digital music downloads. This suggests that subscription-based services may be more likely and successful than a per-song fee system.
This potentially revolutionary model for marketing culture is about to be dismantled by the new partnership between Napster and Bertelsmann, which is giving the file-sharing site more than $50 million to develop software that will charge users for music. Bertelsmann says it will keep a part of Napster "free," but watch for yourself to see how quickly it shrinks.
These figures, remarkably, demonstrate that almost every assumption about the free music movement, reported in most media outlets and used as justification for a wave of new legislation and legal action like the Digital Millenium Copyright Act, is dead wrong:
- Most music downloaders aren't thieves or pirates but music lovers willing to pay for music.
- Artists have made more money from this new generation of music lovers than they would have without them.
- The true significance of file-sharing wasn't an end to intellectual property, but an exciting new way to develop markets.
- Record companies and other corporations should be supporting file-sharing sites ratherthan hiring lobbyists and lawyers to intimidate, sue and enrage new and eager customers. College students have nearly universal access to broadband, and are tomorrow's mainstream consumers. The more information and culture they have access to, the likelier it is that they'll sample new venues, products and information.
- Evidently, file-sharing isn't a dangerous menace but an effective new method of disseminating -- and selling -- content, and culture. Aside from these new findings, the Napster experience also suggests that when it comes to dealing with the Net, businesses often have no idea what's good for them.
And oh, yeah. Don't believe what you read about yourself.