By Daniel Gross

 

Copy Cats

Napster, the Internet site where people swap digitally-encoded music, was among the most controversial creations of the New Economy. The file-sharing technology gave individuals the ability to copy a product that costs $15.99 – for free. The music industry screamed “piracy,” and sued Napster. While Napster ultimately filed for bankruptcy in June 2002, other file-sharing sites are still functioning. If unchecked, many in the music business argue, they could destroy a cherished American industry.

Over the past half century, several new technological breakthroughs have allowed for the cheaper, and easier, copying of copyrighted entertainment. In each instance, incumbents complained about the destructive, potentially illegal, even immoral nature of the technology – but they ultimately survived.

In 1959, when Xerox introduced its 914 copier, companies suddenly had the ability to make quick, neat, cheap copies of printed material. The number of copies made in the U.S. rose from an estimated 20 million in the mid 1950s to 14 billion in 1996. Authors feared that people would no longer buy books. “Xerography is bringing a reign of terror into the world of publishing, because it means that every reader can become both author and publisher,” the media critic Marshall McLuhan wrote in 1966.

Of course, that never panned out. Why? Just try copying an 800-page Stephen King book – it’s not worth the time, it costs money, and it won’t look nearly as good as the real thing. Indeed, 36 years after McLuhan’s warning, people are still snapping up books. Last year, U.S. book sales totaled $6.37 billion, up from $4.66 billion in 1992.

Next came the VCR in the 1970s. With the ability of individuals to rent and play videotapes, many in Hollywood feared that first-run films would fade away. That didn’t happen either. U.S. box office receipts have risen every year since 1991, when they stood at just $4.8 billion, to a record $8.4 billion last year. Why? The movie-going experience is qualitatively different: the large screen, the smell of popcorn, the social aspect. Besides, watching the latest installation of the Star Wars saga 10 months after its big-screen debut on a 19-inch television screen just doesn’t cut it.

Which brings us back to the music business, where the new technology may indeed prove truly threatening. Swapping a digital file and burning a CD is less time-consuming than copying a 600-page book. And if you’ve got the right equipment, a song obtained for free via the Internet delivers a sound quality similar to that of a store-bought CD. Sales of CDs and tapes have declined in recent years.

All of which means that the record companies must adapt to the new technology rather than try to snuff it out via litigation. (Even a thousand lawsuits won’t put file-sharing software into a vault.) Some bands have found that making a single song available on the Internet for free can help boost sales. And, in fact, the Internet will doubtlessly prove to be a lower-cost means of marketing and distribution. The Rolling Stones may not like it, but for that unknown garage band, file-sharing may be the ticket to stardom.

Daniel Gross is editor of STERNbusiness.