Perspective: Apple and the legacy of Napster

When Napster shut down in July 2001, remember how loudly the recording industry cheered?

After working long and hard to defeat Enemy No. 1, the music moguls celebrated their victory over the renegade download Web site.

Funny how the wheel turns. Three years later, the music industry is looking to digital downloading to help it end a years-long slump. At just less than $100 million, the digital music market still constitutes a relative drop in the bucket when compared with the nearly $12 billion CD business. But downloaders are now projected to make up 20 percent of the music-buying universe within the next five years, according to JupiterResearch.

Apple deserves the kudos it's gotten--but will squander a lot of that good will if it goes ahead with a jihad against RealNetworks.

That shows how far the needle has moved. During the height of the Napster controversy, the sides remained too far apart to figure out how to make it work: You either believed that bits and bytes should be free or dismissed Napster as the epitome of corrosive cyberanarchism.

What a stale conversation--and one that missed the bigger point: Napster had the technology, Hollywood had the music, and something big was on the horizon. If only the opposing sides could ever see the forest for the trees. That was not to be. The music industry was too afraid of losing control, and Napster couldn't run away from the fact that it was a clearinghouse for stolen intellectual property.

The future was put on hold until Apple Computer helped break the stalemate with the introduction of the iTunes Music Store. Just as only Nixon could go to China, Steve Jobs had the credibility with both the Silicon Valley and Hollywood communities to change the debate terms. Apple deserves the kudos it's gotten--but will squander a lot of that good will if it goes ahead with an ill-considered jihad against RealNetworks.

The company had a classic hissy fit last week, after RealNetworks released its Harmony software.

RealNetworks had sold songs from its digital song store since the start of the year. But the files only ran on a handful of portable devices. With Harmony, songs sold from RealNetworks' online store will now work on a variety of portable players, including the iPod.

Where does the user figure in this story? Good question--one that Apple can't answer with a straight face.

Apple came unhinged. A few days after the RealNetworks announcement, Apple hinted about possible legal action and threatened to block Harmony from access to the iPod the next time it updates the device's software.

The truth is that RealNetworks poses little competition to Apple, which has a huge hit on its hands with iPod. Ditto for the company's music store, which has rung up more than 100 million downloads.

A history of bad blood between Steve Jobs and Rob Glaser, his opposite number at RealNetworks, no doubt plays into this developing novella. But ego takes a back seat to a bigger consideration: power. Apple would like nothing better than to exert Microsoft-like domination of the music business.

Too bad. In the struggle over Napster, the music companies turned out to be their own worst enemies. So intent on kneecapping Napster, they ignored the best interests of their customers--which would have been to find a way to coexist with the new Internet technology. Is Apple going to go down a similar path?

Maybe big companies periodically can't help conducting business as if Tony Soprano were running the show. But I can't figure out who's looking out for the best interests of the user in this cockamamy story. It's a question that Apple can't answer with a straight face.

Biography
Charles Cooper is CNET News.com's executive editor of commentary.

More Perspectives

Apple is thinking of the user

With Apple approaching 1 million tracks at the iTunes music
store, constantly negotiating for new tracks and labels, getting
Europe on board, building tools for uploading songs to Apple in
the appropriate format, one-click purchasing, incorporating
Apple-developed Rendezvous technology into iTunes (google
"Stuart Cheshire") creating new iTMS features such as iMix, gift
certificates and allowances, updating iPods and introducing iPod
minis, making the sync process perfectly seamless, what has
Real contributed to this effort?

Absolutely nothing.

What would be the motivation for allowing Real to piggyback on
Apple's hard work? Certainly Real benefits from all of the
contractual issues Apple has worked through, as well as the
technical issues. There are probably only a handful of tracks
from Real that Apple doesn't have, if any - certainly the reverse
isn't true, with Apple's many exclusives, classical works, and
indy labels.

Tell me why Apple should let them in? This isn't computing, it's
other people's music. If anyone should be a target, it's the RIAA.
The commoditization of music, in my opinion, has hurt the
musician and their audience, but Apple is creating a new venue
to discover music in our fractured, isolated, suburbanized
culture.

More power to Apple.

Customer and Company Agenda

I find it funny when people take sides in this issue. Lately it
seems that 'what's best for the customer' seems to be winning
out in this Steve Vs. Rob argument among members in the
press.

Well, no one member of the public can take sides or make
opinions in this matter because we aren't Steve Jobs or Rob
Glaser and we certainly don't represent the collective consumer
(as much as some arrogantly like to think they do). Spouting an
opinion in this matter is just jumping to conclusions.

I can absolutely see the validity of Steve's concern and absolutely
see Rob's concern as well. Both are valid.

What bothers me about this article, is that the author seems to
forget that his iPod or iTunes isn't just 'his'. At the same time, it
is Apple's as well. Apple made it, produced it, designed it and
paid for the R&D. An iPod and iTunes will always be apples, and
if you have it and paid for it, its yours as well...it's shared.

This issue doesn't just 'whittle down' to some simplistic
conclusion as 'consumer rights'. How naive!

Next time I want somebody to jump to conclusions and
completely miss all the enormous details involved in an issue
(which we are and are not privy to) I know where to turn.

Anybody can spout an opinion, it takes a wise person to see the
validity of both sides of the issue.

This is a story?

Nice! C|Net will apparently qualify any tripe by Charles Cooper as "valuable analysis". In fact, this column does nothing. It offers no new insight. It is a re-hash of a few other C|Net stories in the last week.

"Apple and the Legacy of Napster". Woot! Talk about piggy backing on someone elses success. I'm sure Charles Cooper thought "Many netizens and people in the blogoshpere will like to read my article if I use Apple and Napster in the title!".

Let me put things in perspective. Not much has changed in the last decade. MP3 is still the number one format. People using online services from Apple / Real Networks / "The Recording Industry" are generally gullible or have money to throw away. Companies are still squabbling over software interoperability.

*Yawn*. I'll have to click on over to Free Republic to find something interesting to read.

Apple is repeating its own history

Apple had an opportunity to license their OS (and no, I'm not talking about Gil Amelio's ill fated attempt, which was much too late to be effective) which they squandered.

They had an opportunity to relase their OS on x86, which they refused to do because they didn't want to "dumb down" the OS (hello, can you say Windows 1.0?, who was right M$ or Apple?)

It doesn't matter one bit all of the innovation Apple has done if the market leaves them behind. If Apple will not let people draw water from their well, people *will* dig their own, just not on Apple's land.

So now, here we are twenty years later and Apple has this little gem, Fairplay, they absolutely refuse to license. Deja vu.

Those that point to how clever Apple is being with iTunes, which drives so much revenue in the form of iPod sales, are missing the point. Licensing Fairplay at $15 a unit on every Rio, etc., is a much more stable and in the long term lucrative revenue stream than zealously guarding today's iPOD+iTunes stream.

Apple should embrace the threats that are emerging to iPOD and iTunes now while they are in a position to command how their competitors evolve. If they don't, the competition *will* evolve anyway using non-Apple technology, and slowly eat away until iPOD+iTunes has the same market share of Macintosh.

$.02++;

[jestead]

Owning something you create.

Buzzwords and name calling are not a substitute for a thinking
and reasoned argument. Loose talk about jihads and hissy fits
don't address two American staples: ownership and fairness.
Apple developed and owns the technology. It is up to Apple to
decide what to do with that, whether it be licensing or not; the
public likewise has the right not to buy it.

[Terry Murphy]

Apple's path

"In the struggle over Napster, the music companies turned out to
be their own worst enemies. So intent on kneecapping Napster,
they ignored the best interests of their customers--which would
have been to find a way to coexist with the new Internet
technology. Is Apple going to go down a similar path?"

The obvious answer is no. Apple did what the record companies
failed to do in the first place: they created a competitive
alternative to the file trading networks. One of the grossly
overlooked aspects of this story is that Apple has stated time
and time again that they consider music piracy - not Real, Sony,
Wal-Mart, Microsoft, et al - to be their only competition in the
music downloading business. The "path" that Apple choose was
to do something that no other wanna-be company such as Real
was ever willing to do - they actually took the time to think
about it, to analyze the user experience with file trading
networks and develop a solution that would give the user a
better experience. In so doing they provided a trinity of
seamlessly interoperable technologies: the music store, where
all songs are encoded in high quality and can be easily found
and downloaded for only 99 cents apiece; iTunes, a music
jukebox that stores and organizes all of your music in one place,
in one utterly simple and easy to use application; and finally, the
iPod, a pretty cool gizmo that interfaces with iTunes so you can
take all of your songs, organized however you want them, on the
go. Not one of Apple's so-called competitors, least of all Real,
has come close to matching the elegance of Apple's solution. In
fact, all of Apple's competitors seem frozen, and the only
"thought" they have given the music piracy problem is to tell
their engineers to look at Apple's music store and come up with
a knock-off of it - and do it as quick as you can.

Well, the results are in, and they aren't the least bit surprising
under the circumstances. Over one hundred million songs sold
at Apple's music store and the iPod is a runaway hit. Why?
Because music consumers are alot like nature, they travel the
path of least resistance. If Apple provides an easy way to get
great sounding music in a manner that appeals to them, that's
the path they will follow. The vast majority of consumers could
care less about encoding formats, let alone understand them. If
it sounds great and it's easy, that's all that matters. To
paraphrase an old saying, "it's the music, stupid."


Apple has every right to protect it's model for music
downloading and the goodwill of it's customers that it has
worked hard to foster in the music downloading business. As far
as Real is concerned, the only controversy here is that they were
not successful. So lets be "real" about this. There is no halo
above Real's obvious self-interests with it's "Harmony" rip-off.
The lesson Real has yet to learn is that competing with Apple,
who in turn is competing against something much larger than
Real, is a strategic mistake.

A disruptive threat

Apple seems to be attempting to retain the music industry's
trust in their DRM, because without it, there would be no music
store. Trust is important, because at best DRM is more a matter
of 'deterrence by inconvenience' than a security measure. DRM
makes it inconvenient to illegally share songs, not impossible.
Similarly, the reason the music store is successful is because it's
easier and more convenient to buy a song than to illegally
download it.

So essentially, with the iTunes Music Store and the iPod, Apple is
selling ease-of-use and convenience in one simple package.
And Real is threatening that. Real is not a competetive threat,
they are a disruptive threat: Real isn't racing Apple to the finish
line, they are merely defouling the swimming pool.

[charlie cooper]

Reply to M. McDaniel

I don't buy it. It's not Apple's music; it's the consumers' music. As a user I'm more interested in making things easy on me than pledging allegience to any one company. This isn't about religion. It's about interoperability -- or so I'd like to believe. Apple can spin all it wants but let's get real (no pun intended.)

[charlie cooper]

Reply to P. Martens

Nice try but no cigar. This story is as old as the computer industry. When you have a first mover advantage, do whatever's possible to lock out any and all comers. This has less to with protecting IP than in protecting market share. Sorry we don't agree but I still like the quaint idea that the consumer should come first -- all the rest is spin and rationalization.

[jbelkin]

REAL just wants to read the press release - more to story!

It's hard to know where to begin to point out all the errors in his opinion piece but in general, he doesn't seem to realize that MP3's has won the format war in internet audio.

If he would read up on the marketplace, I believe it was Gartner who announced there were 50 BILLION tracks online and that 47 BILLION were illegal - these are vrtually all Mp3's. Right now, Apple's AAC M4P is probably in second with a couple hundred million and of course, remanants of WMA & Real from the days of the internet when radical compression was needed from storage space and dialup hinderances ... And of course, there are fans of the other dozen or so audio formats (OGG, FHN, APE, etc ...) but Mp3 has clearly won and NOTHING will change that.

That's the first key.

Next is that the ipod lets you choose 6 UNLOCKED/OPEN different formats to load into it and 2nd CLOSED/'LOCKED' choices: the Apple itunes music store & audible audio books.

So, in addition to being able to completely bypass the itunes music store, and you have to think DIGITAL, not ANALOG - every file you buy at the Apple itunes music store can be converted to CD Audio that's then unlocked and playable on BILLIONS of CD & DVD players worldwide. That's YOUR CHOICE to do so or you can keep it as a locked AAC M4P file - locked only because you the consumer chooses to.

The itunes music store's main feature is convenience - if convenience over-rides amy misgivings you have about the particular format or the cost, you can easily not buy and itunes & ipod works just fine - you even have free tracks to preview!

In fact, the ipod is so open, you can load any REAL tracks on it without HARMONY - all you have to do is burn it to a CD and then load it onto your ipod with 6 format choices! How open is that?

But of course, Real isn't going to point that out - that isn't going to raise the hackles of the unknowing who will just skim the press release and see the phrases LOCKED CONSUMER MONOPOLY and think it's 100% the truth.

You fell for the PR without investigating further.

REAL is the one with the hissy - they opened a store that is getting no business so instead, they are just going to stand in front of Apple's store and claim, we're just as good!

The itunes music store works - is convenience without closing off any other choices (no stores closed) and you can load EVERY track from every music store (that you've burned onto a CD) so how is that not giving consumers choice? Your ipod works fine without any store tracks - and itunes is FREE - what else do you want?

As for REAL, what about Real's RAM/RM files that are scattered over the internet - where's the consumer choice there? I can convert my AAC M4P files top play on billions of devices but Real's proprietary files? DEAD END. It will only play on their players - where's the hack or converter there?

What about Real giving their own customer's a choice first before trying to horn in someone's business?

You really need to do more than read a press release before forming an opinion - technol;ogy is a tricky thing and you have to keep up.

It's there technology!

Apple is having the success it needs and if there solutions for how they distribute music is troubling for some or what they can or can't be played on, just keep on shopping. They know to be able to stay on top they have to offer allot and stay ahead of everyone else to do so. Apple has always kept there hardware and software within their own domain and it may have it's failures someday but they have always built things with the consumer in mind. To say they don't, isn't fair. There history with the way you use their software and hardware has been allot more user (consumer) friendly beyond anything the world of Microsoft has done. If all RealNetworks can do is try to find the back door and kick it in, getting into the iPod instead of creatively make a better product then they will ultimately have very little to offer in the future.

Steve should be upset

The Realplayer is years ahead of the iTunes player in terms of services for cross-selling. As with Yahoo -Launch, I listen to the genres and purchase through the streaming media genres when I hear new and different artists. I can not do this with iTunes. As a matter of fact, my Realplayer and Yahoo!Launch get loads more play time with me than does the iTunes application (because I have no reason to use it unless I am downloading a song).

I can listen to streamed media channels (no commercials) Realplayer: check, iTunes: nope, I can download a song that I am currently listening to Realplayer: check, iTunes: nope,
I can out of situational context download a song, Realplayer: check, iTunes: check. I can download the song on to an music player (and go jog, plug it into my car's tape deck) Realplayer: check (they can be played on iTunes) and iTunes: check. Steve Jobs should be angry. This is a fight about market share.

[charlie cooper]

You prove the point

In other words, you're saying Real doesn't pose much of a threat to Apple? I wouldn't disagree. So why not make it easier on consumers? This is too reminiscent of the idiotic back and forth between the IM companies. I don't like building walls.

There's a concern about QC

One of the great attributes of the current Apple product line is
how the software that works so well with OS X is produced by
Apple. After 14 years using Wintel and struggling to get 3rd
party products to work with Wintel machines, I LOVE the way
Apple ensures functionality. iSight works beautifully with iChat;
iPod works beautifully with OS X, iTunes & the Store etc.

I can imagine a scenerio in which Apple doesn't push back on
the Harmony product and a couple years pass and then Apple
needs to change the iPod S/W or F/W (for reasons having
nothing to do with Harmony) and suddenly all Harmony-sourced
tunes don't play. Apple is suddenly having to deal with the
customers of another company's product.

Part of Apple's current success and the reason I use their stuff is
due to its' reliabilty. I expect they want that not to be
threatened.

[Not Bugged]

Let REAL finally die for the good of all computer users

This is a last-ditch effort by REAL to ride the coat-tails of Apple/
iPod/ITMS, and Apple's reaction is understandable.

I don't want REAL involved in any part of my computing or music
experience, and most other folks who have ever tried *any* of
REAL's products don't, either. The hallmark of REAL products are
malfunction, intrusion, terrible performance, deception and
spam. Their products more closely resemble spyware than
usable software products, and it's apparent REAL's primary
concern is the continuing use of its products, just like any
garden-variety software worm.

Apple has a good track-record of developing systems and
products that keep the user experience the foremost priority,
and I have no problem if Apple continues to be the dominant
force in the online music market.

[ajbright]

Exactly why MP3 Players are gimics

This is precisely the reason I won't waste my money on a $200+ walkman. So what if it can play 50 times the amount of music I can store on a CD - in terms of cost and benefit, there is no reason to switch from a $20-$50 personal CD player.

CDRs cost less than a quarter, and all the music download sites are compatible with them.

What point is there in buying an Ipod (or any other mp3 player for that matter) if I can only download music from a single source.

No single site has enough of a music library to satisfy anyone's unique tastes. It usually takes at least 3 sites to find the right mix of music for me to fill one 80MB CD. Forget trying to fill a 30 gig HD, the only way to do that is by grabbing the music illegally via a peer to peer network.