Record labels need to think again about how to deal with the phenomenon of file-sharing over the internet, argues technology analyst Bill Thompson.
It looks like the battle over online music is going to continue for some time, but it is at least becoming clearer that even the big corporations realise something has to be done to break the deadlock between licensed and unlicensed download services.
Record labels say $35m worth of music downloaded
The current situation is getting ridiculous. In Australia, the police turned up with a warrant at the offices of the country's largest ISP, Telstra, and searched its servers for evidence of subscribers who have been downloading unauthorised music files.
The record industry claims that music worth over $35 million has been downloaded through peer-to-peer services accessed over Telstra's network and is looking for evidence to mount a prosecution.
In the United States, Verizon, another ISP, is still in court arguing that it should not be forced to tell the music companies the name of one of its subscribers, whether or not the person in question has been hosting unauthorised copies of music files on their computer.
Sharman Networks, who run the Kazaa file-sharing service, is about to be sued in the US even though its headquarters are in Australia and it is incorporated in the Pacific island nation of Vanuatu.
And the Recording Industry Association of America has admitted attempts to fill P2P servers with corrupt or empty files in order to make the networks less attractive to users.
Boost to broadband
All in all, the unlicensed services are under serious attack, legally and technologically.
Yet file-sharing continues to thrive. Grokster claims 10 million users a month.
A recent survey commissioned by the company found that far from being stereotyped US college students, 71% of its users are between the ages of 25 and 54, their average household income is over $50,000,and 53% have a college degree.
At the same time, digital broadcaster pseudo.com has announced plans for a weekly one-hour TV show about rap music that will be distributed for free over the Kazaa file-sharing network.
The programme will include adverts, and provides an interesting alternative to stuttering streamed video from MTV.com or the other online TV stations.
And this week BT's dotmusic service announced that it will offer "unlimited" downloads to its subscribers - although the quotes around unlimited seem to be an important part of the offer, since you can only listen to the music you get on your PC and have to pay if you want to burn it to a CD.
Still, this is an interesting move from a major service provider, and it will be interesting to see if it succeeds in its stated goal of helping to drive the uptake of broadband in the UK.
BT looks like it will hit its target of having one million broadband subscribers by the summer, but will have to do a lot more to get the planned five million by 2006.
However dotmusic has a serious flaw, one it shares with the other licensed services like PressPlay and MusicNet.
Although it advertises 150,000 tracks to download, including a couple of Eminem albums and David Bowie's back catalogue, I cannot listen to Bob Dylan or Radiohead.
Eminem albums legally available on dotmusic
If I want Dylan, and I am the sort of ageing hippy who does, then I have to go to PressPlay since it is run by Sony, his record company.
It is like having one record store for each label, so that I have to traipse from shop to shop to get the records I want.
Not only that, but online I have to register separately with each service, and I get different file formats, different ways of looking for the music I want and different restrictions on what I can do with the music I have paid for.
The current system is a mess, and it is all the fault of the record companies, concerned with their own short-term interest and unable to imagine how they could make lots of money from online distribution.
Napster emerged because the record industry did not provide what people wanted. When Napster succeeded, they paid their lawyers to strangle it, but still did not realise what was going on, leaving the field to Kazaa, Gnutella and Grokster.
And they are still resisting the sort of fully-committed engagement with music downloading that could transform the way we pay for and listen to music.
Licensed to share
The key is licensing. At the moment the record companies, who own the copyrights in most of the music most of us listen to most of the time, see no good reason to license their material for distribution.
Partly this is because they are concerned that once a digital file is available on the net then it will just be copied and they will lose control of it. That is why they are so interested in copy-protection technologies and digital rights management software that can control this sort of thing.
But Bob Dylan is on a different service
But the other reason they do not license material is that they want to run the services themselves and do not want to help competitors get established.
There seems to be no way to force them to license their music, and they would rather spend vast amounts of money prosecuting services that are offering what people want than try to sort the problems out and deliver something that fans would want to use.
When Sony, BMG, EMI and the others complain about the money they have lost to what they call piracy, I cannot honestly say I have any sympathy, since they brought it on themselves.
Perhaps BT and other ISPs, desperate to find things for people to do with their broadband connections, will be able to convince the music business to see sense about online music where their customers - the fans - failed.
Otherwise the courts are going to be very busy in future.
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Bill Thompson is a regular commentator on the BBC World Service programme Go Digital.