Kazaa, Napster, iTunes, MTV: What's up with peer-to-peer (p2p) music download software?

The music indus­try is feel­ing more opti­mistic than it has for years. Apple's dig­i­tal music-download ser­vice — iTunes — has won cus­tomers in far greater num­bers than once seemed pos­si­ble. Now with Nap­ster 2.0 released, and what a cool inter­face it is, should we be look­ing at online piracy hav­ing dimin­ish­ing returns?

The music indus­try is feel­ing more opti­mistic than it has for years. Apple's dig­i­tal music-download ser­vice — iTunes — has won cus­tomers in far greater num­bers than once seemed pos­si­ble. Now with Nap­ster 2.0 released, and what a cool inter­face it is, should we be look­ing at online piracy hav­ing dimin­ish­ing returns?

Apple's iTunes sold 1 mil­lion songs in its week, each song priced at 0.99 US$. Now that Apple has made the ser­vice avail­able to PC users?previously, only a Mac sys­tem would work?sales should soar still higher.

Nap­ster 2.0 has a library of 500,000 songs to choose from, which it claims is about 100,000 more than iTunes. Its strong brand makes it a for­mi­da­ble addi­tion to the mar­ket. Not sur­pris­ing then that Nap­ster and iTunes are not really bum-chums at this time! But that's not it: the heavy­weight MTV is plan­ning to launch a sim­i­lar ser­vice too!

But the fact that more peo­ple are will­ing to buy music online than seemed likely does not mean that the industry's prob­lems are any­where near over. In the next five years, says Informa Media Group, a media infor­ma­tion pub­lisher, dig­i­tal sales of a la carte down­loads and sub­scrip­tion ser­vices will grow 20-fold. But they will account for only $1.8 bil­lion, or under 6%, of the global music mar­ket. Peer-to-peer file shar­ing will deprive the indus­try of $4.7 bil­lion of rev­enues in 2008.

Kazaa and Mor­pheus became house­hold names around the world, as did WinMX in Asian coun­tries, but recent law­suits in the United States by the Record­ing Indus­try Asso­ci­a­tion of Amer­ica sparked fears in the minds of sev­eral users.

So the lat­est sell­ing point for new ver­sions of peer-to-peer net­works in recent months is that they can guard the iden­tity of users.

The new most pop­u­lar tool that I've come across in recent times is the Earth Sta­tion 5, based in, of all places, the Jenin refugee camp on the West Bank. After the RIAA said it would sue, its soft­ware was down­loaded more than 16m times in 90 hours. So far, it seems to work.

To glimpse the future, big music com­pa­nies should look not at iTunes' encour­ag­ing num­bers but at September's price cut by Uni­ver­sal Music Group, the biggest record com­pany of all, which reduced CD prices for con­sumers by nearly a quar­ter. One rea­son for slump­ing music sales is that cus­tomers believe that CDs cost too much. Now, other firms will have to lower prices to com­pete with Uni­ver­sal. Dis­count stores such as Wal-Mart, Cir­cuit City and Best Buy will drive them down more.

The suc­cess of iTunes has made clear to the music indus­try an uncom­fort­able truth: many peo­ple want to buy sin­gle tracks, not albums. Apple's data show that its cus­tomers bought 12 sin­gles for every one album at iTunes. That com­pares with 0.02 sin­gles per album in Amer­i­can stores. The best artists may tempt peo­ple to buy a whole album. But the indus­try can no longer rely on get­ting the price of an album as a reward for back­ing a band.

Moby said recently that the record indus­try will have to throw out its cur­rent busi­ness model. It will no longer be able to make huge profit mar­gins on CDs that cost next to noth­ing to man­u­fac­ture. To com­pen­sate for lower prices, he says, the indus­try needs to cut its mar­ket­ing for artists by as much as four-fifths. Once the record com­pa­nies have less mar­ket­ing clout, and with inter­net dis­tri­b­u­tion, says Moby, artists will be in a pow­er­ful posi­tion. "Why", he asks, "is a record com­pany any more qual­i­fied to send an MP3 to iTunes than I am?"

One rea­son why peo­ple have placed a lower value on music in recent years is that record com­pa­nies put so much of their energy into cre­at­ing acts that are hugely, but only briefly, suc­cess­ful. That could change in future as the indus­try alters its busi­ness model. If com­pa­nies can­not make money by sell­ing online, one option will be to try to get a piece of a band's other rev­enues. They would then have a strong incen­tive to nur­ture long-term quality.

18 comments
  1. jacob phillips says: Nov 11, 20039:04 pm

    Music­Now also has a sim­i­lar ser­vice (in part­ner­ship with "Best­Buy" stores) –

    http://www.bestbuy.com/digitalmusic

  2. P.H.Lauke says: Nov 12, 20039:17 pm

    Inter­est­ing piece. P2P stuff is increas­ingly being used in orga­ni­za­tions, e.g., this music school.……

    http://wired.com/news/digiwood/0,1412,61173,00.html?tw=wn_tophead_3

  3. Kirin says: Nov 15, 200312:02 pm

    Some tools you forgot:

    - Limewire: http://www.limewire.com (based on Gnutella)
     – Acqui­si­tion: http://www.acquisitionx.com/

    Both have superb col­lec­tions. Acqui­si­tion is of course for Macs only, but Limewire is writ­ten in Java so works every­where (I think)

    Kirin

  4. Owork says: Nov 16, 20036:54 am

    Why would I buy a dozen eggs from the mar­ket and hope they aren't rot­ten when I can own the chicken and take only the good eggs? Artists that whine and com­plain about free down­load­ing are most often the ones pro­duc­ing the stinkers. Take Met­al­ica for exam­ple with their aptly named Load and Reload. Two Cd's of ran­cid crap for the price of 100 writable Cd's. Which one should I choose? Guess. In my opin­ion, this is the worst decade ever for music. Ohhh.. White Stripes! I can make bet­ter tunes in my garage… and do. Until the record indus­try puts out a qual­ity prod­uct at a rea­son­able price they will con­tinue to see low­ered prof­its, p2p or no p2p.

  5. sniptools says: Nov 16, 200312:33 pm

    Excel­lent point, Owork. I myself see that there is a rea­son why p2p is so pop­u­lar — because cus­tomers are send­ing a mes­sage to the music busi­ness that they don't like the cur­rent way music is bun­dled, in 10 US$ CDs where one doesn't really have a say in what one gets. If I were in the music indus­try I'd be glad that con­sumers have given me a new busi­ness model, which can use new tech­nol­ogy. This is exactly where Apple, Nap­ster and MTV have seen their next opportunity.

    And yes, that lat­est Metal­lica album was a real clunker.

  6. salaami says: Nov 17, 20039:21 pm

    kazaa is no more just a free­bie tool. it recently had an inter­estint con­cept of sell­ing a real movie as well

    http://rss.com.com/2100-1026_3-5106829.html?part=rss&tag=feed&subj=news

  7. Trent says: Nov 19, 20031:05 am
  8. Guiliano says: Nov 23, 200310:25 pm

    Well all these down­load soft­wares have done is to get the music com­pa­nies scram­bling to come up with com­pet­i­tive offer­ings. Sony and Bertells­man may merge, oth­ers are in talks: http://news.bbc.co.uk/1/low/business/3264083.stm

    Cheers,
    Guiliano


    P.S. Can I leave my blog URL instead of email address on your site?

  9. jllor978 says: Nov 24, 20039:59 am

    I pick up a copy of the local news­pa­per here this morn­ing and find, on the front page, a pic­ture of the MPAA bulid­ing. i assume this is another list of file­shar­ers being announced to the pub­lic and ignore it. i con­tenue my day, and go and col­lect my daily mail. i find in it a let­ter from the MPAA. Know­ing who and what they are, i open it. it is my Cease and desist let­ter, one of 2 i have got­ten thus far, this one far more sear­i­ous than the last sev­eral months ago. this let­ter states that all file­share­ing activ­ity must be dis­abled and all illi­gal files must be deleted from my hard disk in order to avoid legal action. so, i humor them. i move all my files to my removalbe hard disk, trans­fer them to my MP3 player and unin­stall Kazaa. but i will not stop shar­ing my knowl­edge with the world, and just because Kazaa is no longer a good option for me, i switched to Super­nova, which i THINK is safer, and install a fire­wall. this begins the war between me and the MPAA.

    Why does some­one liv­ing in Amer­ica still not stop shar­ing files, even with the MPAA breath­ing down my neck?because of my beliefs. because of the 8 year-old lit­tle girl from new york. you dont know? well, i heard that an 8 year-old girl, who's par­ents are poor, down­loaded 2 50 cent songs from the inter­net, was dis­coverd my the RIAA and charged with 300,00 U.S. dol­lars. her par­ents, total make about 50,00 dol­lars in a year. so they could not pay, they can barly make house pay­ments, and keep there daughtor fed and clothed. the RIAA has taken them to court demand­ing that they pay, all at once, all "dam­ages and copyright-infringment". the case is still unde­cided by the judge. so i file­share for the 8 year old girl who cant pay 300,00 dol­lars to the RIAA. i file­share because knowl­edge is not bound by any law in any coun­try, i file­share because knowl­edge is power to be shared by all to all who seek it.

    –The Engine of Hate–

    You know, i have got­ten a few emails from local friends of mine about an argu­ment i have got­ten myslef into with a mem­ber of the senior team here on the site, and they ask me why i have done what i have done. i cant tell you, i cant tell myself, but ill be damed if i let any­one walk ontop of me. i cant, too much pride on the line here to do that. to be per­fectly hon­est with you, i love that type of stuff, as in being hated. i am a chris­tan by birth, and hate is somet­ing i dont have too much of, so i guess i seek it elswere. i see adver­sity as a good firend of mine, i love the look on peo­ples faces who say i cant do this, or could never achieve that, after they see i have done it. that not only gives me pride, but also shows me that i am not weak. shows me that i am enough of a man to stand and fight for my right to say some­thing you might not like, even if i am alone. i am alone, i guess, but i still will stand, even if it means my ban­ish­ment from any P2P forum.

    so, what can be said? noth­ing. but i ask all who read this, Share. do not dis­able shair­ing in Kazaa E-donkey or any other net­work. if it means you are sued, at least you will be able to see for yourslef what a greedy orginiza­tions such as the MPAA and the RIAA can do. you can see that 8 year old girl from new york, you can see for your self what greed can drive pople to do.

    even, if in the end, this whole site and all oth­ers related to it are taken down, it will only grow. lets look at what hap­pend to nap­ster before it was finally stopped. they have already cast a pub­lic light on the whole P2P issue, and it con­tenues to grow. had they shut there mouths, respectable peo­ple whould have down­loaded 1 song from a CD, thought that they liked it and actu­ally purch­esed the CD from a local music store, but now i see what they have in mind, and will rather down­load the entire CD. so what, they still make some­thing like 30 bil­lion U.S dol­lars a year, and insed of liv­ing a life of com­plete com­fert, they only get a life of semi-complete com­fert. excuse me, but i work 40 hours a week to earn my money, these peo­ple put out one album a year and live off from that, never lift­ing a finger.

    this is for all those peo­ple who know what i mean, which is most i assume. i think that most peo­ple are like that, work­ing 40 hours a week, some prob­a­bly more, in order to pro­vide for their loved ones or just make a lit­tle money. they dont fly in privet jets they own and have a 500,00 Dol­lar car, and have just as much put into "Rimz and Tirez".

    so if the FBI serves a search war­rent on my house, and i am arrested and con­vected of copy­right laws, would it mat­ter? no, i am just a drop in the bucket, so to speak. but time has run short this sat­ur­day evening, so i must go. more on this purhaps, later.

  10. jllor978 says: Nov 24, 200310:03 am

    btw, any­one who talks on this sub­ject should read this essay http://www.red-bean.com/kfogel/writings/copyright.html
    peace

  11. MelbourneIT says: Dec 16, 20036:34 pm
  12. Emmanuel says: Jan 15, 20048:22 pm

    Has any­one here heard of Bit Tor­rent? I believe they offer a fab­u­lous and prac­ti­cal alternative.

  13. Drew says: Jan 22, 20046:33 am

    RIAA are at it again. Today it was announced the RIAA attack dogs (lawyers) filed suit against 500 more evil doers for down­load­ing music. Their last sweep of these net­ted a cou­ple in Ridge­feild WA, for down­load­ing Rap and Heavy Metal songs. Because they live near me I heard all about these thieves. YES! The artists must be pro­tected heinous crime. Here is a quote from the CNN article.

    "Among the RIAA's recent tar­gets is retiree Ernest Brenot, 79, of Ridge­field, Wash­ing­ton, who wrote in a hand­writ­ten note to a fed­eral judge that he does not own a com­puter nor can he oper­ate one."

    Read the whole arti­cle here — >
    http://www.cnn.com/2003/TECH/internet/12/04/downloading.music.ap/

    PS, How do you think the artists were ripped off before the Inter­net came along…Could it be …MMmmm …Record Indus­try lawyers?

  14. allNighter43o says: Jan 25, 20044:46 pm

    To get to the source of SmR or TMD movie down­loads you have to go to the source. Both these style of movies are from chan­nel on irc. If you do not know what irc is it is a world­wide file transfer/chat net­work. Go to http://www.mIRC.com and down­load one of the basic mIRC scripts and conenct to irc.galaxynet.org and go to the chan­nel #smr-movies or #smr­movies. There are 2. Wella ctu­ally 3 cause SmR stands for Shadow Movie Realm but #Shad­owrealm is a pri­vate invite only chan­nel and the other 2 are its pub­lic ver­sions. Once there ask where to get their scripts at thatw ere writ­ten by a few of us to bet­ter rep­re­sent the needs of the users in those channels.

    From there you can learn all about how to access "fserves" and all the stuff you will need. For the per­son who wants to know how to view the smr movies once down­loaded you have to have the smr codec. You can get it from either one of the smr movie web pages or just search on http://www.google.com for "smr codec".
    SmR movies are com­pressed in a pro­pri­etary video com­pres­sion for­mat which requires the proper codec to view these movies. The SmR codec is just a hacked up ver­sion of DiVX and is not as good espe­cially since the file sizes are exactly the same.

    But all that aside that is all the info you need. IRC is the key!!!!!!

  15. sniptools says: Feb 22, 200410:49 am

    Or, you can call RIAA a gang :)
    "It's prob­a­bly not the first time that record com­pany exec­u­tives have been likened to Al Capone, but this time a judge might have to agree or dis­agree."
    http://snipurl.com/4nfm

  16. JJ says: Apr 11, 20049:41 am

    Bit Tor­rent and the Super­Nova site is the alter­na­tive to those wish­ing to keep ahead of the game. But let me pose this question.

    Would there be whole­sale copy­ing of some of these files if peo­ple could afford the music, movies, etc? See, I think this is about dol­lars… not about FREEDOM. '

    Let's face it… this is intel­lec­tual prop­erty… and artis­tic prop­erty. In my day, I only owned ONE Bea­t­les album… WHY? I couldn't jus­tify spend­ing what lit­tle money I had on music. ISn't that what this is about NOW?

    So, peo­ple are wrong to take this music to enter­tain them­selfs with (though I do think there is no harm with down­load­ing and PREVIEWING IT… and only buy­ing the stuff you really like. ). OR am I wrong.

    I know now I own all the bea­t­les stuff on CD! OF course, when your an adult mak­ing all the money you need and then some, it just makes no sense to sit in front of a com­puter mp3ing all night, does it. So I splurge.. and I buy…

    Now tell me, if you younger folks had, let's say, six fig­ures a year com­ing in to you… would you still stay up late down­load­ing MP3's??? Would you?

    I doubt it… it is about money. I find that is the case (besides pre­view­ing songs) about 90% of the time. The new­vartec dot com web­site is a por­tal site for grant­ing access to career options in this field. You see what I mean. http://www.newvartec.com But that is for folks that want to work.

    We will always have peo­ple.… like my uncle… who is per­fectly capa­ble, yet hasn't worked in 40 years! Sad. And the teens that don't want to improve their life, well those peo­ple are going to be like my uncle… down­load­ing ille­gal stuff well into his 60's.

    Or so it seems to me. Your thoughts?

  17. sniptools says: Apr 12, 200410:31 pm

    Hi JJ,

    Thanks for a thought­ful note. I com­pletely agree that down­loads should be lim­ited to pre­views, and my belief is that they will even­tu­ally indeed be. We are cur­rently in a stage where the trans­ac­tional model of music sales and pur­chase is chang­ing, and change is always a bit more dra­matic than nec­es­sary. Look at the astound­ing suc­cess of iTunes and all the oth­ers, it is a good har­bin­ger of people's will­ing­ness to pay in the right amounts. This is a lot more palat­able to con­sumers than hav­ing 10 – 15 songs (on a reg­u­lar CD) forced down their throat for a pre-determined lump­sum price, even if only a cou­ple of songs turn out to be enjoyable.

    Cheers,
    Shashank

  18. Fawn Albert says: Apr 20, 20075:27 pm
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