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The Digital Beat: Napster's Side of the Digital Music Smackdown

October 16, 2001 12:00 AM ET

The stage is being set for music's equivalent of a WWF Smackdown. In one corner: free rebel services like Kazaa, MusicCity, Grokster, and, the powerhouse, Gnutella. In the other: MusicNet and PressPlay, the industry's two upcoming "legit" (and competing) online music subscription plans, plus Napster, the original bad boy now re-launching as a paid service. It's the ultimate irony in the ever-changing war over music online; Napster, having seen the light, is about to compete with its dastardly spawn. And it's still going to have a tough time surviving.

The past few weeks have shown the locker room strategies unfold. Napster was the first to move by making good with its old nemesis, the music establishment. The government oversaw negotiations that led to the company's agreement to pay music publishers $26 million for past copyright infringements. Napster coughed up a $10 million down payment towards the licensing of copyrighted material it plans to distribute, in part, 700,000 songs from Madonna to Britney Spears. A re-launched Napster, which will charge subscribers a variety of monthly fees for access, is expected within the next few months.

The music industry quickly followed suit by shoring up its own licenses from songwriters and publishers. Labels will pay a $1 million down payment against future use of copyright protected songs for its own subscription services. Warner, EMI and BMG have already begun testing their plan, MusicNet. Sony and Universal are readying their competing option, PressPlay.

At the same time, the second (or is it third?) generation of Napster alternatives is picking up momentum. A new report shows that use of the free services boomed by nearly 500 percent from March to August. Morpheus, the ingenious free program offered from a site called MusicCity, leads the pack as it offers easy-searching for audio, video, text and images. Unlike Napster, this new troop of wares thrive on a decentralized network -- essentially connecting one user's computer to another's -- which makes it difficult, if not impossible, to shut down.

Despite the elusiveness of the wares, the industry is finally taking aim. Just recently, the Recording Industry Association of America and the Motion Picture Association of America filed copyright infringement cases against MusicCity.com, Grokster and Consumer Empowerment, the company which licenses the FastTrack file-trading technology used by many of the peer-to-peer sites.

So who should music fans place their bets on? My money's going on the free services. The only way that they'll be shut down is if a judge decides to go after individual users -- an unlikely, though not entirely impossible, option. For the music industry (including Napster) to compete, it's going to have to come up with some kind of groovy "value-added" services that deliver more than just the tunes you or I could alternatively suck down on Morpheus. For example, charge a monthly fee that not only includes access to, say, Garbage's digital downloads, but also Garbage concert ticket discounts, exclusive one-on-one chats with Shirley Manson, free Garbage t-shirts, and other stuff Garbage fans crave. This won't win the war over music online, but it will at least keep the industry alive.

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