Genie is out of the bottle for recording industry

The recent news that the recording industry is going for the coup-de-grace on Napster should come as no surprise to anyone. For all of the industry's talk about eventually embracing the Napster peer-to-peer model, its desire to finish off Napster has been as apparent as has its lack of ideas for how to creatively deal with this threat to its empire.

But there is an another drama playing out behind all the anti-Napster moves. For all of the apparent victories the recording industry has scored, it has already lost the war. Shaun Fanning's invention of Napster has forever changed the ground rules for artists, the recording industry and the music audience. In the end, no matter what tactic the recording industry attempts, the end result will be the same -- a shift of power away from the industry, and toward the music-buying/listening public, and farther down the road, to the artists themselves:

1) The recording industry succeeds in killing off Napster, but there are so many "Sons of Napster" out there, that legal action continues for years, with the industry always one step behind the 19 year-old software designers creating the new peer-to-peer programs.

Even now, there are several new Napster-like programs that have drawn millions of users: Gnutella, Aimster, LimeWire, BearShare, Audiogalaxy Satellite, Morpheus, to name some of the more popular ones. And while they have not individually achieved the penetration of Napster, they are collectively approaching its popularity.

In desperation, it seems, the recording industry has decided to go after individual users, probably in an effort to scare people away from peer-to-peer programs. Recently the industry and its agents have been after Internet service providers (ISPs) to shut down the accounts of customers who have been heavy users of Napster or its clones. While not all the ISPs are complying -- Verizon has refused to take this approach, for instance -- some have buckled under the pressure. Yet the tactic will ultimately also prove futile -- too Big Brother-like. And as one young user who was recently thrown off one ISP said in a recent media interview, "I'll just go to another one (ISP)." It's also a very bad PR move.

2) The recording industry jumps online and starts to offer its own music services

If the industry had been smart, the moment it went ofter Napster, its members should have offered their own online service that sold music at a reasonable price. But they didn't, and the result was the proliferation of the music sharing programs named above. Worse, now that the industry is finally gearing up to offer services, they've chosen a model that well, stinks.

Basically, the recording industry wants users to rent songs. Music fans would pay a monthly fee, which would give them access to the music they like. If they stopped paying the fee, however, no more music. This model may work for DVDs, for instance, where you watch a movie once or twice. But people like to OWN their music, and listen to it again and again. This model is a no-starter from the get-go.

3) The recording industry finally produces a good model, and teaches people to pay for music online.

It is here that the ultimate irony can be found. By teaching people to pay for music online, the recording industry will hasten its ultimate downfall -- at least in its present incarnation.

If artists can sell directly to the public, take in all the revenue and eliminate the legendary hassles and contract problems associated with recording companies, why wouldn't they? Already several musicians have moved away from the music companies and have started to offer their music online. Artists like Ani DiFranco, Todd Rundgren, Matt Wilson, Chuck D of Public Enemy and The Cowboy Junkies have already started this process.

Currently, they attract devoted, but relatively small audiences. Imagine what will happen when the music audience (mostly young people who know how to use software like Napster) accepts that it must pay for online music -- a flood of artists marketing and selling their own music, and building devoted online communites.

One model for this already exists - the British band Marillion. Ignored by the recording companies, Marillion used the Internet to build a base of fans, who helped fund the band's recording efforts. The band e-mailed the 30,000 in its fan database and asked if they would pre-order the album -- 12,674 did. This gave the band enough money to record the album without the help of the recording industry and retain the rights to all their music. (The band listed every person who pre-ordered the album in its liner notes for the album , "Anoraknophobia.")

Ultimately, the recording companies will really only have one thing to offer -- public relations services to help promote recording artists offline. The industry will change from one that focuses on production to one that offered special services in limited areas.

This won't happen right away, and the recording industry won't go down without a fight (as we are witnessing) -- there is just too much money to be made ... and lost. But the genie is out of the bottle, and it won't be stuffed back in.