MP3: It's Only Rock and Roll and The Kids Are Alright
As Chuck D of Public Enemy says, Napster and other such networks are not pirating machines. Napster is radio. Fans will continue to download cheap or free music, and will probably continue to buy CDs if record companies cut their prices and offer value like documentation, design, arrangement and convenience at a reasonable price. The Beach Boys' Pet Sounds is Pet Sounds because it is a complete masterly document, not a collection of digital signals. Despite Dr. Dre's complaints about Napster, his new album is a major hit. Free MP3s have not kept it from crossing the Sam Goody counters.
I spend about $60 per month on CDs over and above any "free" music I download. I download to taste, not to replace. That's common behavior among digital music fans. I have a CD burner, which I use to make mix discs for lectures and parties. But I have yet to assemble an entire replacement album from MP3s. That would be a supreme waste of time. I usually spend no more than $10 per CD because I buy used and from an online music club. Once every six months or so, I pay retail, usually for something brand-new. And my students have not stopped buying CDs either. They are, however, choosier about what they buy.
Of course, not every user of MP3s or distribution networks is a good-hearted fan, or even a driven revolutionary out to overturn the commercial-music industry. There just might be a whole lot of excessive copying going on. But no one seems to know how many CD sales abusive Napster users are costing record companies. Sometimes the Recording Industry Association of America tries to provide evidence of sales losses attributable to MP3, but their research is unpersuasive. Is every downloaded song a potential CD sale? Every dozen songs? What if I hate the song I listened to? The fact is, there is no way to measure accurately the financial impact of MP3 use. And some evidence suggests its effect on CD sales is just as likely to be positive as negative.
A recent study filed in court by the plaintiffs in the case against Napster seemed to indicate that Napster had hurt CD sales among college students, the most visible users of the service because they have access to high-speed Ethernet connections in their dormitories and computer labs. The report, released by the digital-rights management company Reciprocal, examined sales from 2,099 record stores located within one mile of 3,454 US campuses. Those stores experienced a 7 percent drop in sales between a 1998 peak and early 2000. Interestingly, the study considered more than two years of sales data, even though Napster has been out only since last August. What difference could pre-Napster sales make in this debate? If sales dropped before online swapping began, then there must have been some other cause for such a decline: price hikes, online sales, pickier buying habits or just plain aversion to Ricky Martin, perhaps.
Plus, the standard industry sales tracking service, Soundscan, does not count sales at small, independent record stores that do not subscribe to it. Most important, college students are big users of online CD merchants like EveryCD.com. Online sales did not show up in this survey. Perhaps students are buying less from the stores down the street, which do not offer discounts and charge sales tax, and buying more from tax-free web CD services. As it turns out, better studies suggest that college students are actually a minority of Napster users. Most Napster users are over 30.
Approaching the issue from a different direction, there is reason to believe that the proliferation of MP3s helps the CD business: Other Soundscan-based studies show that CD sales were up 7 percent in the first quarter of 2000 compared with the first quarter of 1999. In the midst of its price-fixing fiasco, the music industry would rather not confront the possible positive marketing effects of MP3s.
When Napster's lawyers filed briefs July 3 in federal court arguing against a request for an injunction against the service, they included a new study by Peter Fader, a professor at the Wharton School of Business at the University of Pennsylvania. Fader's surveys of Napster users show that they most often use the service to try out new tunes to decide which CDs to buy. He argues that Napster is a great boon to the CD industry, and sales figures seem to support that assertion.
On the other hand, Chuck D of Public Enemy, the most visible pro-MP3 recording figure, predicts slow but steady death for the CD and for major labels. He envisions a world of small, independent websites offering free digital music. Emerging and marginal artists would not suffer so much under this system. Communities, not major synergistic media companies, would control the marketing efforts.