Guest Commentary

satellite delivery, a commercial broadcasting boom in Europe, and, of course, the karaoke machine—every one a profit maker for the music industry and all built by someone else.

So, the expectation for profits from Internet distribution of music is extraordinarily high. At the same time, there is little perceived need to "do something" positive and supportive for the technology. That wasn't needed before.

But what if the Net and its associated technologies turn out to be the Xerox machine instead? Is there any question that the copy machine made the deathbed for the print music business?

The electrostatic copy machine was, in its day, a technology every bit as revolutionary and upsetting to the status quo as any of these other examples. Try as they have, the book publishers, educational publishers, technical and professional journals, periodical companies, and music publishers have never solved the issue of mass "free" duplication of their intellectual property on copy machines.

Copy machines are closer in kind to Internet-related technologies than are either CDs or videocassettes. The machines share with the Internet extraordinary business utility, educational and scientific utility, time-saving applications, ease of individualized use, low pricing for high value, massive consumer acceptance, a near-runaway pace of market penetration, and, incidentally, a capacity to make absolutely faithful copies. Unlike the VCR and the CD, the Internet technologies and the copy machine developers never planned for one moment to depend on the entertainment industries.

Piracy in the CD and videocassette businesses required illegal networks and commercial-scale duplication equipment to produce inferior ripoffs. "Piracy" on the Internet is as simple and as guiltless as someone making a perfect copy of a magazine story at Kinko's.

Enforcement of copyrights and legal razzmatazz never stopped consumers' using copy machines. It took more than 10 years for the courts to resolve copyright questions from the copying of whole chapters from books for redistribution in classrooms. Legal tactics are place-keepers at best.

The courts aren't going to act quickly to break new ground over the Internet and its related, ever-mutating software threats. Maybe a lawsuit could eventually stop the company called Napster, but it will not stop the software from being used by college kids or anyone else.

There is no effective legal strategy against file swapping. Going to Congress for new laws offers more hazards than comfort. In a head-to-head fight, can four or five record companies, four foreign-owned, win over a rampaging American-as-apple-pie software and hardware juggernaut? Not likely—and not likely even inside the same company: Time Warner/AOL isn't going to stop AOL members from file-swapping music, is it? And how is file swapping that different from making a tape from a CD for a friend? The Recording Industry Assn. of America (RIAA) worked hard to favorably define digital rights in music with a Byzantine amendment that was almost as long as the whole Copyright Law. But the courts will enforce those new amendments with juries that can decide common-sense questions with common-sense answers the music industry may not like.

Surrender is hardly the answer or an option. The specter of a complete abdication of control over music uses on the Internet looms large. It is no paranoid fantasy. But the music industry's reliance on injunctions and intellectual property laws as a front-line defense to the Internet industries is a little like building a fence to protect against a tornado.

If it's copy machine déjà vu, what can the music industry do to avoid a terrible flashback?

It should start by embracing the inevitable and then find a technology-based and market-driven solution on its own. It should be as entrepreneurial as the rest of the pack. It should try to find ways to support new technologies and support new entrants instead of looking for proprietary solutions and "unbreakable codes."

Some suggestions:

• License everyone who wants a license instead of endlessly searching for the best technology or the right mousetrap.

• Make deals now at reasonable openly negotiated and even royalty rates to avoid the clear and present danger of Congress stepping in with more compulsory license fees at levels that are certain to be painful.

• License collectively so that the process is efficient for the user. Use the RIAA's considerable skill in Congress for a better antitrust exemption that's broad enough to help consumers.

• Try charging one rate for all uses and abandon record-selling retail pricing models that took years to mature in a context that bears little relationship to what goes on on the Internet.

• Stop using the RIAA as both an enforcer and as a commercial agent for (only some) licenses. It is hopelessly confusing to the uninitiated—that is to say, everyone else on the Web.

• Stop labeling people as thieves and pirates and start thinking of them as customers that the music business has failed to reach.

Do not expect a repeat of the lessons from the CD market or the videocassette business. The Internet is very different. People use it very differently. It will bust expectations and do completely unanticipated things. It lacks predictability. Seventeen-year-olds are in charge. It is as volatile as rock'n'roll, and there are fewer and fewer people around who can remember the impact that that had on the old status quos of the music industry.

Music publishers have a special place in all this. No other part of the music business has as much skill at collecting royalties from as many different enterprises for the use of music. The rest of the music industry doesn't have to look far to find highly skilled executives with deep experience in exactly the kind of problem-solving needed for the Internet challenge. Sure, technologists can build a solid mousetrap, but the music publishers are more likely to know how to bank on the transactions. Publishers may have a stodgy reputation, but they have proven to be the most adaptable to the rules of other businesses.

It would also be helpful if the music business lowered its financial expectations. Is it really sensible to expect today's monster to become tomorrow's savior? The prodigal son started out as part of the family. Music is just a passing blip of digital content on the Net. It isn't part of the same fabric.

Here again, the mind-set of music publishers could be part of the solution. Record companies are used to making "things" and selling "things." Record companies are used to huge margins, inventories, and big investments. Music publishers, on the other hand, deal in ephemeral and intangible uses of music in broadcasts and transmissions. Their instincts for those markets and how to raise billions by collecting pennies might be the best place to find answers.

There is no place like home, after all.