How Internet Music Distribution Grew out of Illegitimacy

From The Urbn:

Many regard the internet revolution of the past 20 years to have transformed the world for the better, exponentially increasing information flow. The rate at which the World Wide Web has developed over this diminutive time frame is startling, with the result that many traditional media companies still scramble to find their feet within this relatively new arena. As I covered in a previous article, the Internet, in its earliest days drew an increase in public traffic of 100% annually, and continued to gather steam well into the end of the 90′s. With such a large growth rate, this naturally raises problems for traditionalist companies, especially in light of the internet’s unrestricted nature comparable to a digital metropolis wherein crime goes unnoticed.

The internet was initially available to the public at a crawling rate of 26.5Kbp/sec; in other words, it took a 3MB mp3 little under 30 minutes to download. Thankfully, this has changed dramatically over the last twenty years. As speed technology and internet infrastructure increased, a whole new area that we call cyberspace opened up and brought with it both endless opportunity and controversy. The most memorable issue to arise was, of course, that of the massively successful music downloading software Napster in 1999.

The incarnation of Napster as we know it today differs greatly to when it first emerged, as it originally acted as a network for users from all corners of the globe to upload and share their personal music files. As the first major case of intellectual copyright infringement on the internet, it caused a wave of reactions from from the (then) “Big 5” conglomerates. At its peak Napster attracted 13.6 million active online users, a force record labels undoubtedly felt. Not only did the music sharing platform open the floodgates for a culture of sharing pirated music, but they also provoked major music companies to start battling over their own subscription based services to fill the void.

Sony Music Entertainment and Universal Music group, two of the “Big 5″ players at the time, initially came forward with Duet, which they later dubbed Pressplay. The platform of 60,000 tracks allowed users to stream and download music under the blanket of a subscription fee and was distributed in partnership with Yahoo!, who were an internet leviathan at the time. The other three major players (EMI, BMG and Warner Music Group) backfired with a similar service called MusicNet, which rapidly joined up with Realnetworks, a network of 75,000 tracks. This raised a fundamental problem for the public: In order to experience music across record labels, the end-user would need to subscribe to both companies.

At the turn of the century, the divide between record companies and these two ventures caused real friction. Pressplay ran four monthly subscription rates; a starting price of $9.95 allowed for 30 downloaded tracks and 300 songs streamed per month, while a $24.95 subscription was good for 100 downloads, 1000 streamed songs and the right to burn 20 tracks to CD. RealOne’s scheme (the product of Realnetworks and MusicNet) ran a monthly subscription fee of $19.95, which included 125 music downloads and 125 music streams per month. Judging by the value for money in these figures alone, it’s not hard to see why these two big ventures would inevitably fail up against illegal music piracy. In order to try and curve this ever growing epidemic, the music industry would need to restructure themselves and step away from their old mentality.

There then seemed to be a step in the right direction for music companies; they had begun to transition from traditional media to virtual, but only within a certain limit. With copyright infringement being an ever present problem, Sony and Universal started a trend of essentially putting spyware on their music CD’s to prevent illegal copying, a technique that the consumer would eventually rule out. Only a few months later at the start of 2002, yet another player joined the game; Rhapsody announced they would be streaming unlimited music for only $9.95 per month and granted users universal access across all major record labels. Still, due to the the company’s strict nature of copyright policies, the collection was still limited to 113,000 tracks.

At this point of course, nobody knew that all these previous models would be swept under the rug by what was then considered the underdog of the industry.

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