By Fred Hume
Wow! It's July already. The kids have been out of school for about three weeks and parents are already wishing it were September. I'd like to say "congratulations" to all the "Y2K" graduates. You made it!
So much for pleasantries, on to business.
Let's talk a little about another controversy hitting the computing world - that nasty, evil, ugly little program called Napster, a free program that allows Internet users to download and share mp3 encoded music files. You know, the one that's taking the food right out of the mouths of recording artists and record companies. The one that's decimating their mega-billion profits. The poor babies are having to suffer along on only multi-billions now. At least according to the Recording Industry Association of America (RIAA) and a few recording groups.
Well, let's see. According to most industry watchers, it costs a record company about 95¢ to make a sellable CD. You, I, and our little kiddies go to the record store and plunk down $16.99 for that same disk. OK, granted, there are advertising, transportation and other costs, but really, $16.99?
Now a little known fact of the recording industry: under a standard recording contract, the artist reimburses the studio for all production costs of the CD from the profits on sales of the CD. The artist's profit is very small till these costs are repaid, then they start making somewhat more. Now consider that a "good" CD from a major artist will go "gold" (500,000 copies sold) in about a month or two and you can see the problem here, right? Napster might push these sales back by a week or so. Also, it's pretty much a given in the industry that most of an artist's money comes from live concerts. Figuring the logistics, expense, and time involved in producing and conducting a "tour," why would the artists do this if there weren't large profits to be made? Out of the goodness of their hearts? Take it from an old DJ, fun, touring ain't.
According to the RIAA, sales are down drastically around college campuses where Napster use is more wide spread. Why? High speed Internet connections and limited financial resources maybe? Let's see what happens when the summer comes and students are home on the 56, 33.8,and, yes, 14.4k dial ups. Ever try downloading a three or four megabyte file at 56k? Know how long this is going to tie up the phone line? Know how long it's gonna take mom or dad to go ballistic?
Also, the college students will probably have summer jobs and a little more money. Let's see some sales figures then.
"The RIAA cites a study conducted by SoundScan, a unit of VNU Entertainment Marketing Solutions. According to the study, CD sales in general increased 18% between the first quarter of 1997 and the first quarter of 2000, while sales around the most highly wired college campuses declined 13% in the same period." Hmm, up 18% overall and down 13% at college. That looks like + 5 % to me.
Now here are a few facts that RIAA hasn't made public.
A report by Student Monitor, a market research firm, shows that 33% of students have purchased a CD or cassette - the most common student purchase - online in the last year. Another 5% purchased downloadable music. Only 20% of students said they visited a music store in the past week, down 5% from six months ago.
Napster is the fourth most common source for music. About 17% of the students use it. MP3.com, which just signed a deal with the RIAA is the sixth largest.
The fifth most common music site students reported visiting is music retailer CDnow Online. This company experienced a 32% increase in sales to 18 to 24 year olds from the first quarter of 1999 to the first quarter of 2000.
Don't you wonder why there's no reference to numbers one, two and three? Could they still be "music stores, clubs, etc?
Seems that if all the sales facts are known, the impact isn't quite what the RIAA wants you to believe. If you are suing for copyright infringement, you need to show some harm was done.
Have you ever plunked down your money for a CD and got one good song and ten that were junk? Suppose you only want one song on a CD. Should you have to buy the whole CD? Maybe that's why record companies started selling CD and tape "singles." Could they know the rest of the CD is junk and you probably won't buy another one after being burnt once or twice? Plus $2 or $3.99 for a "single" is a lot more palatable to a parent than $16.99 for the whole disc.
Have you heard a song on the radio you like and tried to figure out the title or artist so you could buy it? Good luck. Could it be that the RIAA knows that they're peddling junk and if you can sample the whole CD with Napster, you probably wouldn't buy it? Sampling a whole lot of music with programs like Napster is, I believe, in the long run, good for the music industry. It separates the wheat from the chaff and may help keep the recording industry going instead of shooting itself in the foot by alienating the music buying public.