Old Napster guy’s fan letter to Spotify upstart

Lessons Not Learned

What makes the analysis such interesting reading is how rarely we have heard such an approach from the music industry. Parker was looking to build a great music consumption product first: the goal was satisfying punters. He did so by doing an end run around the copyright-holders. But the rights-holders in the music industry have been wary of each other, and wary of experimentation.

It's something Hollywood has learned from by designing UltraViolet. Instead of revenue protection as the primary motivation, UV sets out to reward you for joining, adding a lot of conveniences over today's world of plastic discs and expiring time-limited streams. UV sells you a licence.

To be fair, not everybody in the music industry wanted to close Napster down. Bertelsmann, famously, made an investment in the startup. Others were supportive, too. The US mechanical rights collecting society the Harry Fox Agency, and British and international independent record labels, also announced a licensing agreement with the startup. But the heavyweights won the day. Plastic disc sales had brought growth to the music industry; CD sales were to peak in 1999.

And Napster itself tried to turn itself into a subscription service – a tale fascinatingly told by Chris Castle, an attorney for the company at the time.

I’d disagree on one aspect of Parker's excellent analysis.

Spotify doesn’t "allow" person-to-person file sharing, even though, technically that’s exactly what it’s doing under the hood: moving a song file from one person to another across a network. Spotify uses P2P to save on bandwidth; if a song is on the same network, it pulls it down directly from a swarm, rather than from a central catalogue. Spotify simply keeps these song files in an encrypted DRM container.

We’re constantly told now that “ownership doesn’t matter”, and Spotify charges extra to untangle the inconvenience introduced by its DRM.

Some people don’t mind this at all, but I’m not convinced.

Spotify is terrific for many of the reasons Parker suggests, but converting our enthusiasm for music into cash by allowing leakage from this container really ought to be explored. It’s still an opportunity going begging. ®