Digital music distribution over the Internet is a tool of pirates, bootleggers and copyright thieves. Or else it's a legitimate new form of distribution which has the major record companies scared because it threatens their market share. It all depends who you believe.
The most common method of sending music over the Internet is by using the compressed file format known as MP3. MP3 can compress a three-minute song that would take up roughly 30MB on a CD, into 3MB without a perceptible loss in quality.
The Recording Industry Association of America (www.riaa.com) which represents the major record companies, says this is why it tried to block the release of Diamond Multimedia Systems' (www.diamondmm.com) Rio portable MP3 player. 'It seems doubtful that there would be a market for MP3 recording devices but for the thousands and thousands of illicit songs on the internet,' says the RIAA. As far as the major record companies are concerned, MP3 equals piracy and the Internet is the work of the devil.
As with most stories, however, there is another side. The Internet has been used as an effective promotional tool, with artists giving away tracks free in order to generate PR, raise awareness, and get people to try the music. The Beastie Boys (www.beastieboys.com) are one of the first major acts to have done this.
But another major group, Public Enemy, has fared less well. A statement on their site (www.public-enemy.com) reads: 'Today Polygram/Universal, or whatever the f*** they're called, forced us to remove the MP3 version of Bring The Noise 2000. The execs who lately have made most of the money in the music biz, are now running scared from the technology that evens out the creative field and makes artists harder to pimp.'
The Internet, meanwhile, is also being embraced as a route to market by independent labels and thousands of artists who struggle to be noticed by the major record companies. And while the majors are playing the piracy card, sites such as MP3.com, and Goodnoise (www.goodnoise.com), which sell the work of independent artists, are cultivating a crusader image of little guys taking a stand against the greedy big bullies.
Sales of recorded music over the Internet currently total $100 million of a $12 billion market, according to Forrester Research. But this is predicted to grow to $4 billion of a $14 billion market by 2002. And along with this will come a loss of market share by the majors in favor of independent distributors who are already staking out their territory and establishing their brands online.
Although they don't mention it, it is this as much as the piracy that has the 'conventional' record companies in a spin. The PR battle over Internet music is just beginning, but the real story is about a new technology breaking down an established business model that has served majors well for decades.