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The death of free music on the Internet?

Napster caves in, while Scour Exchange gets set to shut down. What happened to our MP3s?

By Matt Ferraro

Byron Igoe, SM '04, loves using the University's extremely fast Internet connection to exchange music and movie files through Scour Exchange, one of the world's most popular online file-sharing communities. Yale's ban on the now notorious MP3-swapping site Napster hasn't stopped him. "Now that the Pandora's Box of file-sharing is open, there's nothing Yale can do to stop me from downloading copyrighted material," he said. Byron isn't alone. Yalies of all stripes have joined online communities to share MP3s and other media files.

But in the past few days, events that amount to tectonic shifts in the world of online file-sharing may threaten Yalies' free-music-loving lifestyle. First, Scour filed for Chapter 11 Bankruptcy on Thurs., Oct. 12 and a few days later announced plans for Listen.com to purchase its assets. Then, on Tues., Oct. 31,Napster, Inc. made a deal with German media giant Bertelsmann, agreeing—to the chagrin of users the world over—to charge a fee for its service and distribute some of that revenue to record companies, though vague comments were made about continuing to operate the free service. And, the next day, Scour filed for permission in bankruptcy court to shut down Scour Exchange, another dominant file-sharing program on campuses like Yale's.

According to Scour Spokeswoman Dawn Rusalov, it is not a question of if the Exchange will be closed, but when. "It would be under the time frame the Court dictates," she said. "At this point there's no time frame that's laid out." Because Scour is in Chapter 11, it must ask the court's permission to do anything that is "outside the ordinary course of business," such as shutting down the Exchange, Rusalov explained.

What does this mean for Yale students? Some are less concerned than others. "I'm not worried," Jason Park, BK '04, said. "Just because Napster and Scour and programs like that get shut down doesn't mean people can't still transfer files over the Internet or by File Transfer Protocol (FTP), for example. There's plenty of software out there that will enable you to burn and rip music from CDs."

Dealing with the devil

Industry experts do not share Park's apathy. Lisa Napoli, Internet correspondent for MSNBC, sees Napster's acquiescence as an important moment for the future of online music. "It made the front page of the New York Times above the fold...because it's an enormous moment for file sharing and it's an enormous pivotal moment in the life of the web," she said. She sees the Bertelsmann/Napster venture as an obvious move. "Napster [was] a really cool idea that had no business model and the only way it was ever going to have a business model, especially after the lawsuit, was to sell itself out to the corporate interests."

But what does Napster's deal mean for Yale students? Some students have said that Yale should now reinstate access to the service since it plans to charge subscribers and distribute music through legal means. Daniel Updegrove, director of the Information Technology Services, foresees such outcome only after Napster settles the legal claims of all of the companies suing it, which include Time Warner, Sony, Universal Music Group, and EMI.

"If the collective copyright holders were to settle with Napster, then universities would not have a legal issue, per se," Updegrove said. "We would then have only to deal with potential bandwidth contention issues. If such contention were to become an issue, I would envision universities adopting one or more traffic-limiting or bandwidth-shaping strategies, perhaps by time of day." As for now, Director of Data Network Operations Joe Paolillo noted that bandwidth-hogging activities such as file exchanging no longer exert such a significant squeeze on the network's resources. The University has recently upgraded Internet and Internet 2 connections enabling faster access by more people. "We have a much bigger pipe at this point," Paolillo said.

Updegrove added that there are "no plans at pre-sent" to close other file-sharing sites. Such an action, he wrote, "would depend on how much traffic contention we observed and whether or not copyright holders had notified us of specific complaints."

Locating liability

Updegrove may not have to worry about high-volume student file-sharing when Scour Exchange finally closes its doors. "MP3 trading would certainly decline if Scour closed," Jason Protass, ES '04, said. "But after a few weeks, students would find a different service. You know—where there's a will, there's a way."

Napoli agrees that there will always be fringe services, but claims most file sharing will eventually be dominated by the large recording companies. "Another kid somewhere is coming up with the new Napster clone or something just like it and that's going to keep on happening," she said. "And the record industry is going to keep on either trying to buy up these clones or basically own the 'Net so much that the clones are just something you do on the side."

The Scour/Listen.com partnership appears as though it is leaning in that direction. In a press release circulated after Listen.com agreed to purchase Scour's assets (but did not assume responsibility for Scour's legal liabilities), Rob Reid, Listen.com's founder and CEO, said, "By incorporating certain Scour assets into our service, Listen.com will soon be able to provide the most complete digital media search capabilities to our syndication partners and consumers." He also said that they plan to develop a way to "distribute multimedia content in a way that respects rights holders."

The Recording Industry Association of America, the first group to sue Napster, is one of several plaintiffs suing Scour. By closing the Scour Exchange, the company hopes it limit its liability, according to Rusalov. She cited Wednesday's court filing: "After careful consideration and analysis the company's Board of Directors has determined that the best business decision for the company is to shut down the exchange voluntarily and to attempt to settle the litigation brought by the plaintiff group." The possibility remains, however, that Scour could be found liable for about $250 billion in damages and back compensation to record companies, she added.

"Scour is a perfect example of what would have happened to Napster if Napster hadn't gotten the venture capital money and all this attention," Napoli said, referring to the millions of dollars invested in Napster. Listen.com, she speculated, will have to try to make money from Scour's vast number of users, which is the company's only real asset. They will most likely charge a subscriber fee and make deals with record companies in much the same way Napster is doing now, she said. Listen.com was unavailable for comment.

What now?

Surprisingly or not, many students are not too worried about the specter of Scour closing and Napster charging. "I would definitely be able to [download songs after Scour closed]," Igoe said. "Maybe some other people wouldn't for a while, but another program will come out—another person will start an almost identical service—and it will all start over again," Byron said. "I could use Free Net or Gnutella. They're both available free online," he added, referring to two of the many other decentralized file-sharing programs.

When asked whether or not they would be willing to pay for Napster, several students responded negatively. "No, I won't pay for Napster. Not as long as I can get my music for free" from other services, Park said. Another student who preferred to remain anonymous is unfazed. "I can get albums that were just released today, or won't be released for weeks, over FTP," he said.

It appears, though, that recording companies are making significant advances against mainstream, large-scale file sharing sites. Napoli sees an ongoing battle between the major recording companies and the smaller, renegade swapping programs. "The music industry is going to have to change," she said. "But it's naïve to say that the music industry is going to go away." She said that while already famous stars such as Courtney Love and Chuck D may have the flexibility to distribute their music without the help of publishers, most artists do not. "Maybe the record company's role over time gets a little bit diminished because people can go to [a] MP3 and listen to music they've never heard before," she said. "But that doesn't mean there isn't going to be a promotional machine, a managerial machine out there."

The battles will continue both in the courtroom and in the boardroom as the technology changes and companies and individuals attempt to capitalize on the power of the Internet. But in light of recent events, one person in the online music industry, who wished to remain anonymous, offered a pessimistic view: "It's not looking real good for free music on the Internet."

Graphics courtesy napster.com and scour.com. Find out more about music on the Internet in this week's online exclusive at www.yaleherald.com.

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