Page last updated at 09:02 GMT, Friday, 26 June 2009 10:02 UK

Napster - 10 years of turmoil

Close up of CD, BBC
In 1999, the music industry was unprepared for Napster's arrival

1999 saw the debut of Napster - the net-based software that let people share their music collections. It started a storm of change in the music industry and here Geoff Taylor, chief executive of the BPI, reflects on what has happened in the last 10 years.

Napster was the Rosetta Stone of digital music. Until its release in 1999, few people understood the long term significance of turning sound waves into ones and noughts.

Yes, the CD had introduced greater convenience and - to most ears - better sound quality; and the arrival of CD burning put the power of near-perfect replication in the hands of the consumer.

But until Napster, hardly anyone understood the tsunami that would be unleashed by combining the ability to copy digitally with the power of the internet to connect all the computers on the planet.

Napster understood the internet's potential for decentralised music distribution, and offered it to consumers in a way that was simple to understand and use.

Many critics have argued that the music industry could have avoided some of the problems it faces today if we had embraced Napster rather than fighting it.

That's probably true, and I, for one, regret that we weren't faster in figuring out how to create a sustainable model for music on the internet.

Legal obstacles

But this view also overlooks the formidable hurdles we faced in 1999.

To make music fully and legally available on the internet meant clearing the rights in millions of tracks for a huge number of countries, agreeing how the revenue should be shared, implementing workable DRM (which everyone considered fundamental at the time), developing technology to track all the downloads for royalty purposes, as well as creating a quality user experience people would pay for.

In 1999 Napster developed a great digital service, but did so at the expense of music, while the music business protected music at the expense of progressing online digital services.
Geoff Taylor

Shawn Fanning and his P2P followers didn't worry about any of those things, and weren't prepared to pay fair royalties or to partner in a business model that could sustain investment in new music.

Ten years on, it's interesting watching other creative sectors struggling with similar issues. In the meantime, the record industry has gone through a transformation.

Online now contributes 13% of our revenue, we have a whole range of new business models such as WE7, Spotify and Comes with Music, and new ISP services - like the unlimited download service recently announced by Universal Music and Virgin Media - are coming online.

Young, innovative people with advanced digital skills are thriving in music companies and transforming the ways our artists can connect with their fans. The music business is now widely recognised as leading the creative sector in redefining itself for the digital age.

New threats

But this innovation, and the vital investment by labels in new music, is constantly undermined by the various P2P successors to Napster.

Shawn Fanning and Jonathan Schiller, AP
In 2001, Napster was ordered to stop letting its members share copyrighted music

These companies take and exploit what musicians and artists create, without being honest enough to reward them. And the publishers of books, journalism, films, TV programmes and other media are now lining up with us in the fight against illegal downloading.

Like us, they see how it will destroy their ability to create new content. So we are united in calling for ISPs to play a more positive role in steering consumers towards digital services that reward creators.

Some people are sceptical when we say that the music business loses hundreds of millions of pounds of revenue as a result of illegal downloading every year.

A case in point is the recent blog by The Guardian's Charles Arthur saying "Why does the music industry persist in saying that every download is a lost sale?"

The answer is, quite simply, that we don't - our figures are based on a detailed analysis of actual spending behaviour in different age groups.

It is true that some people use P2P for music discovery and spend more on music as a result, but in the aggregate they are heavily outweighed by the number of people whose downloading substitutes for purchases. If the reverse were true, our business would be booming and not contracting right now.

Harm done

There is simply no getting around the fact that billions of illegal free downloads of music every year in the UK mean that significantly less money is coming into the music ecosystem.

Comes with Music, Nokia
Nokia's Comes with Music service shows the industry is adapting, said Mr Taylor

Music companies invest more money into Artists & Repertoire (the music industry's Research & Development) than any other similar business - over 20% of revenue.

But illegal downloading means that artists are not getting paid for their work, and there is a direct knock-on effect on the number of new bands that music companies can sign and support.

In the long term, this will do serious harm to the strength of music in the UK. That's why BPI continues to lead the fight for creators' rights on the internet and ISP responsibility, despite opposition from those who naively believe in an endless free lunch.

Most people in this country agree that musicians have a right to be paid for their work, and most of us want Britain's unique contribution to the world of music to continue.

In 1999 Napster developed a great digital service, but did so at the expense of music, while the music business protected music at the expense of progressing online digital services.

In 2009, we've all learnt our lessons. Napster is now run as a service which fairly remunerates artists and musicians, while the music business now offers a great range of legal digital platforms.

We are making encouraging progress in harnessing the internet's unique power to connect people through music, but in ways that also reward artists and the labels that support them.

Napster was a technological revolution. But the social and cultural revolution that would follow from developing a sustainable ecosystem could be deeper and longer lasting.

The invention of Napster and all that has followed may soon deliver its greatest legacy - a renaissance in artistic creativity for the digital age.

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