ANALYSIS: File-sharing organizations play different comms tunes

While the media remains fixated on legal and ethical ramifications, Matthew Creamer finds that file-sharing services remain focused on customers' wants and concerns.

While the media remains fixated on legal and ethical ramifications, Matthew Creamer finds that file-sharing services remain focused on customers' wants and concerns.

In the course of becoming a record company's biggest nightmare, Wayne Rosso has become a reporter's dream. Accessible, profane, and apparently uninhibited, Rosso is an unofficial spokesman for the radical fringe of the file-sharing world, an insurgent place where people talk about the free flow of information with a fervency that used to be reserved for politics. Rosso's former company, Grokster, whose software is one of many available applications that allow people to share music files without paying for them, remains a b?te noire to the industry whose profit margins it has eaten away. A no-publicity-is-bad-publicity kind of guy, Rosso revels in the criticism he takes - "I'm the Paris Hilton of file-sharing," he says - even boasting how a famous newswoman told him a well-known media executive dubbed him a "mobster." At his new company, Optisoft S.L. and its peer-to-peer software applications Blubster and Piolet, Rosso vows in no uncertain terms even more headaches for content moguls. Whether Rosso, a music-industry vet who takes credit for advancing the careers of Crosby, Stills & Nash and Fleetwood Mac, is to become the face of the music industry's future or will go down as a painful symbol of its chaotic present remains to be seen. Through its trade association, the Recording Industry Association of America (RIAA), the industry itself has sought to cut off the market for Grokster and its kin by filing a series of lawsuits against people who download unlicensed music files. As of earlier this month, the RIAA had filed almost 400 lawsuits, settling many of them. Though the legal effort was at first widely dismissed as a PR faux pas, a recent Pew telephone poll concluded that the lawsuits have led to a dramatic decline in music downloads. But that poll, though widely reported, has come under heavy criticism, and not only from the file-sharing services. Big Champagne, a kind of Nielsen for peer-to-peer networks, states that downloading is as popular as it ever was. To be sure, Congress will eventually take up the issue, but that's unlikely in an election year. In the meantime, a wide variety of players are staking out positions on an issue that poses a number of tough legal, political, economic, and moral questions. A relaunched Napster, which is now a paid service, joins Apple's iTunes as the most popular places to pay for music downloads. In the peer-to-peer world, Kazaa is attempting to recast itself as a legitimate company where people can swap and sample licensed music files. It currently distributes music from independent outlets and is seeking alliances with the major record companies. To that end, it gave seed money to establish a trade organization, the Distributed Computing Industry Association (DCIA), whose goal is to find a middle ground that makes the record industry, the file-sharing services and software distributors happy. Kazaa's rebranding challenge In essence, Kazaa, a popular software brand purchased two years ago by Sharman Networks, has had to mount a rebranding campaign, hiring Magnet Communications to execute a $1 million advertising initiative and a publicity push for its CEO. Its image was once closer to Grokster than iTunes, and now it's trying to achieve an air of legitimacy by appealing to both the recording industry and consumers. "The big challenge for the Kazaa brand name and for Magnet is to communicate to a very wide user base a new brand promise and value proposition," says Magnet president Paul Jensen. In many ways, Kazaa's challenge is that of all but the radical end of the spectrum: figure out a business model that will work, get the major parties to sign on, and then attract consumers. The importance of consumer behavior is often understated in coverage of the issue, though organizations like the RIAA and the Motion Picture Association of America have made several coherent attempts to appeal to customers' sense of right and wrong when it comes to copyright issues. In the very near future, if it's not already so, it will become nearly impossible to go to a movie, read a newspaper, or even watch television without being reminded about the economic effects and moral problems caused by violating copyright law. But for all the efforts to demonstrate how skirting copyright law can affect not only artists and entertainment executives, but also peripheral players like engineers and stuntmen, there are still thinkers, such as New York magazine media critic Michael Wolff, who conclude that the rise of the internet has made it un-American to pay for content. If people like Wolff are correct, then an entirely new way of thinking has become ingrained in a matter of years and provides a clear challenge for marketers and PR people. Carol McGarry, EVP and creative director at Schwartz Communications, has found this attitude in her work for Peppercoin, a micropayment system that allows merchants to charge miniscule amounts of money for individual songs. Her job is, of course, to publicize the service to business and consumers. "What we're doing," she says, "is showing that there's an inexpensive way to buy songs legally." McGarry says the RIAA's lawsuits have made this somewhat easier "by building in a disincentive to swap music." But they've also made Wayne Rosso's job easier by giving him a nemesis: a rich, institutional enemy who resolves its business-model problems by suing teenaged girls. Magnet's Jensen does not think the lawsuits should have any effect on the way file-sharing organizations do business, but he does think they need to follow Kazaa's lead and find a way to do business without infringing on copyrights. Kazaa, after all, is banking on consumers flocking to its brand, not in small part because of the legitimacy to which it aspires. Kazaa is up to 45 million licensed music, video, and software downloads per month, which, Jensen says, is a significant increase. "The customer we're going for wants to do what's right and is not interested in downloading with the potential for lawsuits," he says. "Wayne Rosso's organization is targeting a different customer. There will always be people out there who think information should be free." Impact on consumers To a degree, this cuts to the issue of how much time and energy consumers spend in choosing how to consume content. Kelly Larabee, senior strategist and SVP at The Rose Group, which does PR for the DCIA, disagrees with the suggestion that consumers won't discern between a service that offers a free product in a way that's at best unethical and at worst illegal and one that charges, but is undoubtedly law-abiding. "Americans and most people who have the resources love to support the art that speaks to them," she says. "I do think that we've gotten used to sampling. And our who-we-trust meters have changed quite remarkably. Our questions regarding what is true have changed a lot in the cross-pollination of media. For example, you can question the 20th Century Fox movie plug you see on a Fox channel if you hear somewhere else that it's not a great movie. We've had to be more skeptical as consumers." It remains to be seen whether skepticism toward even established media and entertainment brands will translate into big business for the online content sites that work with content providers. It's less ambiguous that PR people have their work cut out for them in affecting attitudes, especially those of that desirable young demographic. McGarry, for one, has already noticed how pervasive the notion has become among younger people that music should be free. She says, "The hardest thing to change is something that's become part of culture."

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