When Napster first went live 10 years ago this month, the music industry didn’t immediately notice. It wasn’t until around September 1999 that the RIAA got wise, and not until December that a lawsuit was filed.
Leading the organization at that time was Hilary Rosen, who presided over the case that shut down Napster and all the music industry moves that followed until she resigned in 2003. Now, as managing partner of the pr and communications strategy firm The Brunswick Group, as well as CNN political commentator, Huffington Post editor-at-large, and Internet entrepreneur behind the OurChart social networking site for Showtime’s “The L Word,” Rosen has kept a close eye on the music industry’s developments over the years.
She’s been on record saying she thought the labels should have struck a deal with Napster, had concerns about the DRM interoperability issue from the start, and is a firm believer that labels still play an important role in the music ecosystem.
On this 10th anniversary of the service that shook up the music industry forever, Rosen shares her thoughts and memories with Billboard.
How do you think the music industry should mark the 10th anniversary of Napster?
I think it was the beginning of the hard decisions that had to be made. The industry had been doing very well prior to that and experiencing some pretty consistent growth over the prior 10 years. There was more money to invest, there were greater returns. So, Napster was the beginning of the need to make harder decisions. Before Napster, we knew there were hard decisions coming. We had anticipated the need for a digital performance rate for instance. We had anticipated the need for much better cooperation with the technology industry, which was going through interoperability crises. We were making the shift between music being played on electronics equipment which were principally made by a disciplined and standardized Japanese electronics industry to music being played on IT devices created by an industry that historically had not been disciplined about interoperability. People really lose the substantive business issues the industry was facing that were harder than just do they embrace or reject online music.
Did Napster help put dealing those issues on track or set them off the rails by being so disruptive?
There’s no question Napster galvanized the process in several important ways. First of all, it brought consumers into the discussion for the first time. All of a sudden, record companies started hearing from music fans in a way they never had before. The “customer” for record companies for many years were radio stations and record stores. All of a sudden record companies were on the hook from music fans. The second thing is it galvanized the technology industry to invest and innovate around the use of music online.
There are some who think the music industry should have handled the Napster situation differently, such as striking a licensing deal or other tactics. Without making any judgments about the way things transpired, is anything different you think you could have or should have done?
I’ve been quoted as saying the record companies should have jumped off the cliff and signed a deal. I thought it at the time. It was well documented that I privately urged that. But it would have been jumping off a cliff, and people have to understand that. The artists were against it. The publishers were against it. Nobody knew how they were going to get paid. Napster had promised they were going to go from a free service to a pay service. By the time those promises had occurred, peer-to-peer had become much more widespread outside the Napster system. So it ended up being much more complicated to figure out how to create a system as user friendly as Napster in a pay environment that could compete effectively with P2P. There were 100 reasons not to do it, and only one or two to do it. Those one or two reasons were more compelling in the long term, but a much bigger decision and tougher decision.
Have things evolved the way you thought they would since then?
There’s been this time period between 2002 and 2006, maybe 2007, where there just weren’t enough deals done. There were so many innovative ways to deliver music and not a lot of licensing support from the music business. That’s just not the record companies, the music publishers have been really brought kicking to the table. It’s one of the reasons the record companies gave up trying to license the whole work and said ‘we’ll just license the sound recording rights,’ because the music publishers were so difficult. The one lesson the industry did not learn after Napster was speed. When you’re talking about technology, you have to move quickly on opportunities. The constant refrain is ‘there’s no money in these opportunities. There’s no advances. We don’t see the pay off.’ But the thing you have to keep pushing back on is ‘what are you comparing it to?’ If you’re comparing it to physical sales or comparing it to an iTunes download, then you’re right, it’s going to be hard. But what you really need to compare to is how else fans are getting the music, which is free. The lessons of Napster, of rapid fire adoption, have been too quickly forgotten. The industry has moved a little too slow and have not benefited as much as they might have by the benefits of technology.
Any developments in the last 10 years surprise you?
No. I think those things I expected to happen earlier. There was too much concentration on security and not enough on interoperability. That was an important concept for several years. The interoperability is the thing that focused most on the consumer experience, and if you don’t push on interoperability, what you have is the only thing that works very well is iTunes. Which works beautifully, but you don’t get much spread in the system from just one system.
Do you think the RIAA can ever win back the music fans estranged after Napster and the subsequent litigation campaign? Or is the organization obligated to play to “bad cop” role?
I think the RIAA became the central organizing vehicle for people’s anger. But they don’t work for the consumers. They work for the industry. It’s the business leaders in the industry that are calling the shots there.
What’s your reaction to the recent Pirate Bay verdict?
There is a sad irony there that they get a similar verdict and they’re similarly powerless to stop the piracy. For many years, I argued to deaf voices that the industry needed to do some public education campaign about music appreciation. That there wasn’t enough sense that music had value, that it mattered. The record companies themselves weren’t used to being companies that were answerable to the public. Chalk it up to the old flavor of rock and roll, which is “against the man.” Since artists were always against the man, and record labels always represented the man, it didn’t matter that they were giving the artist millions of dollars in advances, they were still the bad guy. Essentially, fans adopted that same anti-record company viewpoint and therefore ripping off the man created some extra joy, not just a convenience factor. All of the good things that the music industry has done over the years, and they have done many – I don’t think any industry has done as much to give back and work in communities and respond to crises – hasn’t really changed that old viewpoint. Now, the only and best the industry can do is focus much more aggressively on partnering with artists to derive revenue from the whole of a musical experience. Artists still need partners. There’s no reason record companies shouldn’t be those partners.
Ultimately, what do you think will be Napster’s legacy?
It’s just what Sean [Fanning] intended it to be, which was the day the fans took control. That’s what the Napster legacy is. And the industry has been on its heels ever since.
