What the recording industry must do to survive

Written by Jesse Berst, Contributor
CDs are obsolete.

If recording-industry execs don't take note, they'll be obsolete soon too.

Napster and other peer-to-peer technologies will allow users to buy, trade, package and pay for music in ways that will kill the compact disc. They'll do it by winning in three areas:
  • Cost
  • Convenience
  • Single-song sales

So-called peer-to-peer technologies, of which Napster is one, allow users to bypass central servers and connect directly to each other to trade files -- MP3 files in this case. Napster merely directs users who want music to the hard drives of those who have it. The recording industry wants to squash Napster because many Napster users swap copyrighted material.

The record companies may succeed, but squashing Napster, even if it happens, won't change the way music is bought and paid for in the future. Record companies should open their eyes and see that Napster has tapped into a huge demand for something, and it's not just free music. If they want to survive, record companies will have to steal Napster's benefits, the ones that have drawn 9 million users to the service almost overnight. Let me run through the benefits and then I'll tell you what the new music industry will soon look like, with or without today's record companies.

Cost. Why buy the cow when the milk is free? Faced with the prospect of paying $18 for a CD with only one song you like drives users to find other ways to get the music.

Convenience. Want a song? Go to your computer and download it. No driving to the store, no waiting for a package to arrive in the mail. Want that music while you're at the office, at school, on the road? Download it now.

Single-song sales. For years the recording industry has forced fans to buy music they don't want just to get the music they do. Buy the CD and get the song you like ... and 11 that you don't care about. Napster allows users to get just what they want.

The new music industry will see profit instead of peril in the ease with which digital music can be moved online. Here's what it will look like.

Music will be cheap. Record companies will remove the incentive music fans have to cheat by offering music at a more reasonable price. They can do this. By making just the music people want easily and quickly available anywhere, single-song sales will go way up. This will make up in volume some of what they might have lost by lowering prices. And it will entice law-abiding fans back into the fold.

Music will come with advertising. The recording industry can also recoup costs by serving up advertisements with the music it offers for download.

Music will be available any time, anywhere. Napster is far from perfect. Getting the songs you want depends on whether the person you're trying to download from happens to be online. And connections can be slow. The recording industry has a vastly greater ability to offer people the music they want when they want it at a decent connection speed. Call it the Amazon effect.

Music will be customized. Here's where the opportunity for real creativity really kicks in. CDs put an arbitrary limitation on how music is packaged. MP3 format dispenses with that. Users can and will buy music in packages as great or small as they like. Savvy companies will package and repackage music in themes or for different occasions. A new breed of DJ will arise, building a reputation around his or her ability to pick the kind of music you like from the vast offerings of the industry and deliver it instantly to your hard drive.

It should be clear that even if the recording industry finds a way to silence Napster, the days of buying music in CD form are almost over. Now if I can just figure out what to do with my 45s.

Do you think the music industry will embrace music-swapping technology or just try to kill it? Hit the Talkback button and tell me.

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