Posted on 09/03/2002 9:39:26 PM PDT by chance33_98
Napster Deal Fails, Employees Fired Judge Ends Hopes For Revival
POSTED: 6:26 p.m. PDT September 3, 2002
REDWOOD CITY, Calif. -- All of Napster's employees were handed pink slips Tuesday evening, following a judge's decision to block the sale of the company.
According to a Napster spokeswoman, just before 5 p.m. Tuesday, 42 employees -- including founder Shawn Fanning -- were laid off.
Tuesday morning a Delaware bankruptcy judge ruled Bertelsmann A-G could not purchase the remains of the defunct music-swapping network.
The decision was the death of a deal that could have revived Redwood City-based Napster as a legitimate service. The decision will likely force the company into Chapter 7 liquidation.
Bertelsmann was Napster's chief financial investor. It had already sunk $85 million into the network. The German company wanted to purchase the rest of Napster for an additional $8 million.
Napster has been off line for more than a year.
Suits by major record labels destroyed Napster. Those companies also filed motions in the bankruptcy case objecting to the Bertelsmann sale.
Of course we can't "stop" file swapping, but we can make it inconvenient and somewhat underground, just like cassette duplication 20 years ago.
18 Billion dollars a year.
What are they going for? I've got 2 of them, and haven't listened to either for years.
Now if I can just figure out how to make a buck off of it...
Thanks Nick. And VIVA FR!
Still being edited... yes, of course. I'll add that to my disclaimer.
You didn't pay for it, did you?
For a film that's still being edited?
Napster was just unlucky enough to be the first to get noticed by the big money special interests whose business plans require a cessation of the advance of technology. It is a fool's project.
Copyright law in its present form does not reflect reality. The Internet permanently devalues almost all copyrightable material because distribution is nearly cost-free. The RIAA and huge portions of the big entertainment companies have become unnecessary.
Virtually every computer sold today has a CD-burner. Within a year or two, penetration will be such that just about everybody has one. As well, broadband is finally beginning to reach critical mass. Once these two technologies come together on a large scale - look out RIAA!
Wait until everybody realizes that they can buy a stack of 100 blank CDs for the price of a single pre-recorded CD offered by the recording industry!
I believe that many recording acts in the near future will bypass record companies altogether and will offer their music on their own websites. (Some are already doing that.) People will download the music and burn their own CDs. For a small fee (probably around $3-5), the recording artist will mail out artwork and liner notes so that the consumer at home can "complete" the package. This will be how the recording artists will get paid. Or maybe the recording artist will offer 96bps or 128bps for free download (where the consumer can sample) but will charge a nominal fee for higher "CD" quality MP3s or even .WAV files which offer the best quality of all.
There are plenty of ways a recording artist can generate some significant revenues, bypassing the recording industry completely. Sure, there will be many consumers who will download the music and not pay for it. The music will even become available on the major file-sharing sites like WinMX and Kaaza. But even if just 10% of those downloading the music pay for it, the recording artists stand to make far more than what they were getting from the record companies! In many cases, recording artists would actually owe money to their record label after all the "expenses" were deducted. Only the superstar acts ever made big money with record contracts. All the others depended on concert revenue. This way, even "niche" recording acts can make a decent living by offering their music online. Much less overhead and much greater profit margin. A niche band that used to sell 50,000 to 100,000 copies per album with the record labels was considered a "money-loser" and a liability by their record labels. Now they can be fully independent and make a much better living for themselves. They will probably even become millionaires.
The recording industry had a prime opportunity to get a foothold early on with file-sharing. Had they decided to work with Napster (or even bought it outright) and used it as a tool to shift their distribution channels from physical media to electronic distribution, they might have had a chance to survive long-term. As it stands right now, they are like Wang back in 1982 - they are already obsolete and just don't know it yet. For those that don't remember Wang, they were a company that made word processors and despite the introduction of the PC in 1981, they kept on making those word processors, thinking that people would keep buying them.
The declining CD sales that the recording industry is talking about is only just beginning. If they think it is bad now, just wait. The only thing the recording industry can do to save themselves right now is to drastically lower the price of their CDs and right now, it looks like they are too stubborn to do that.
I would rather pay the recording artist a few bucks direct and burn my own CD then to pay $15 for one in a store. But if they were $5 in the store, I would certainly buy a lot more of them and do a lot less burning.
Well, they could sell T-Shirts for $50.00 at their concerts.
Or maybe if they took a little less for a plastic disc that cost about fifty cents to produce and they sell for twenty bucks, people would be less prone to swap.
On The Other Hand....Recording artist, producers, agents and record companies need to make as much as they can since I am starting a class action suit against them all for ruining my hearing.
Hey! If it works for cigs, hot coffee, fast food, etc. WHY NOT!?!
Excellent question. Only a few people seem to be considering this very deeply (including a few interesting posts above). But one thing that ought to be fairly clear right now is that the old economic model is simply unsustainable.
There was an era before recorded music, and an era of recorded music before the recording industry as we know it today existed. In those eras musicians typically earned their money by performing. When they stopped performing, they stopped earning money. In some sense, we are probably headed back to that model.
Future attempts to defend individual performances as "intellectual property" are doomed to fail. The ability to record and distribute has become dirt cheap. Consequently the availability of the technology to do this is becoming universal. It will undoubtedly shake up the market, perhaps leading to increased emphasis on live performance rather than studio recording.
Another item of note is the mass sypathy for the multitude of artists who sign bad long term deals with companies then get little to show for their efforts. Fans are tired of seeing the companies get the money they think they are spending on NSync, BSB, Mariah, even Aerosmith, The Dixie Chicks, and many many more. The young fan is taking the attitude: if (so-and-so) is not getting paid anyway, why do I care if I steal it?
Finally: the real draw of online trading is not in albums, but in singles. People are tired of paying $16 to get 2 or 3 songs they actually like. The music industry has ignored this complaint for years, but therein lies the solution. Go back to the days of 45s and license each song, not the entire album, and sell accordingly - I remember a brand new single was only $1 or $1.50. I think people would pay $2 or $3 per song if they could cut their own CD right inside a Tower (et al) records - and if it's licensed properly then everyone would still get paid.
Excellent post.
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