Can the Music Industry Change Its Tune

Would you pay $15, 99 for a CD of your favourite recording artist if you could get it for free on the Web? This question has shaken the music industry to its foundations. A tremendous number of Internet users have taken advantage of online file-sharing services where they can download digitized music files from other users free of charge.

The first such services to be widely used were Napster. Its Web site provided software and services that enabled users to locate any of the 1 billion digitized MP3 music files on the computers of other online Napster members and copy them onto their own computers for free. Napster's own computers did not store any music files, but instead acted as a matchmaker. To obtain a specific music file, you would sign on to the Napster Web site and type in the name of the desired song. Napster's central title index would display the connected computers with that specific song. Napster then established a direct connection between the requesting computer and the one storing the desired music file. Your Napster software then would download that life onto your computer. You could play the song on your computer and copy it onto CDs. If you stored it on your computer, others could copy it from you. Napster quickly became so popular that when it was shut down in 2001, it had more than 80 million users worldwide.

Napster users could legally copy and trade uncopyrighted material, but reproducing files without permission is illegal because the recipient does not compensate the owner for the use of the intellectual property. In December 1999, the Recording Industry Association of America (RIAA) representing the five major music recording companies (Universal Music, Sony Music Warner Music, BMG, and EMI), which together were responsible for 80 percent of recorded music, sued Napster for violating copyright laws. U.S. courts ordered Napster to stop allowing users to share copyrighted music files, and the site closed down in July 2002 when it declared bankruptcy. It has since been transformed into a legal fee-based online digital music service.

Napster was held liable for the illegal copying of copyrighted songs because it maintained a central index of members' music on its own central computer. Its closure did not stop widespread illegal music file sharing. Alternative "peer-to-peer" approaches to free downloading were developed that did not require a centralized computer to manage the file swapping. Services using this approach include Kazaa (KaZaA), Morpheus, and Grokster.