[email protected]: Reflections on the Internet’s Most Controversial Music File Sharing Service

I think our mics work. I think we’re going
to get started. There are some people
still making their way in, grabbing lunch. Feel free to help yourself
to food in the back. Thank you all so much for being
here for this conversation about Napster at 20. And special thanks to the team
at the Recording Artist Project and the Journal of Law and
Technology, who joined us– up with us at Berkman Klein
to put this event together. I’ll just say two words
on the genesis of this. We at the Cyberlaw
Clinic here at HLS are celebrating our own
20th anniversary this year. The clinic was founded
in ’99, and I’ve been thinking about
interesting events that relate to some of the
tech law issues that have been on our docket
for the last two decades. And it just so happens that 1999
was also the birth of Napster in Shawn Fanning’s dorm
room, just across the river here at Northeastern. We thought it would be
great to bring together some amazing experts,
so we’re going to have a conversation
here for 40, 45 minutes. We’re going to leave
plenty of time for you all to ask lots of
questions along the way. And we’ll go from there. We have a really interesting mix
of people at the table today. I’ll say really briefly some
intros, then full intros are in the materials. And you can introduce
yourselves as well to the extent you
want to provide some context for your marks. Dave Herlihy teaches at
Northeastern, is a music lawyer and a musician as
well, and a member of the band O Positive– sort of at the right time frame
here to talk about Napster– Absolutely. — in your heyday. So we’ll get through the mixed
legal and creative perspective from Dave, great friend of
ours, great friend of Berkman. He’s done a lot of stuff
with us over the years. Jennifer Jenkins here from
Duke, who teaches music law, teaches trademark-related
issues at Duke, co-wrote the coolest book. This book Theft!, a
great graphic novel about the history of
the music business, as well as a really
terrific open IP casebook. If you’re looking for a resource
for an intellectual property course, it’s fantastic,
and it’s available online, and you should check it out. And then Nancy Baym from
Microsoft Research, who, among many other things, has a
really great book that came out last year called Playing
To The Crowd that’s about artist-fan engagement–
our token non-lawyer, I think. Is that right? Yes. So Nancy is going to give
us her perspective as well. And I thought I
would ask each of you to just say a few words about– either about Napster or
about the wake of Napster over the last 20 years. And we can dig into
some specific questions. Want to just come down the line? Dave– [INTERPOSING VOICES] Sure. so I teach at Northeastern. I’ve been teaching there
for more than 20 years. I was actually teaching
copyright before– pre-Shawn Napster, and
then post Shawn Fanning And so I remember some of
my students were saying, Professor Herlihy, you got
to come and see this thing. You’ve got to come
and see this thing. So I went to a dorm, and
I saw the Napster app. And I said, oh,
come on, not really. So I said, the
Simpsons theme song. Go ahead, get me the
Simpsons theme song. And like, 20 seconds later,
[HUMMING SIMPSONS THEME].. I was like, oh my god. So it was the end of
the music industry, also the end of copyright as a
very well-established field. It became completely
topsy-turvy after that. And it upended the way
that I teach copyright law, the way that I
understand copyright law. And it makes it a very
dynamic marketplace, and it creates all
these policy questions. Like, why should copyright do? What kind of progress
should it support, whether it’s progress for
the owners of copyright or for the public good? And how do you sort of
balance these issues? And so it’s just been– it’s like that moment when The
Wizard of Oz goes into color. And I look at my
pre-Napster period as the black-and-white era,
and then, all of a sudden, it just completely changed. And also, the effect it
has had on business models and the music industry. When I talk music industry
back in the 20th century, it was pretty well established. And now, it’s
completely different, and there’s so many different
variables and dynamics and– and values to be
tried to be unearthed. And so it’s completely changed
the entire landscape, which I think is actually
a positive thing, and I don’t think
anybody’s business model deserves to be permanently
enshrined just because. So I’m going to also
leave it at that. That’s great. Jennifer? I concur with that. So first, I’m going
to turn on my mic. Excellent. Hey, everybody. Thanks for coming out. Thanks for putting
this together, Chris. So I started out as
a copyright lawyer in 1997, so shortly before
the birth of Napster. And I’ve been doing
music copyright, teaching music copyright
for most of that time. And I think we’re at
a real milestone now. I was reflecting over
the past 20 years. So it used to be that when I
asked my students, why are you in this IP class, and why
are you in music copyright, almost all of them would say,
well, my little brother was using this thing called Napster,
and my roommate was using this thing called Napster,
somebody was using something called Napster, and
then it went away, and my free music went away. And I said, what’s going on Mom? And Mom said, it’s
copyright law. And so I’m in your
class because I want to know who
shut down my Napster. And that went on
for a few years. And I’ve seen this seismic
shift in the past few years. This is the first year
in my copyright class that every single person
is using Spotify, or a paid streaming service, and
they’re all paying for it. Everyone was file
sharing, and then there was a period where people were
experimenting with freemium and dealing with the ads, and
now, my students, all around– between the ages
of 20 to 27 or so, they all find that the
price discrimination works, and they’re willing to fork out
the $4.99, or the family plan. So streaming is here. The first-half
results for 2019 show that streaming is now accounting
for 80% of industry revenues. And so I think we’re
at a milestone, both looking back and thinking
about what we can learn from the Napster
experience, and everything that’s happened since
then, and lawsuits and that sort of thing. And also looking forward and
trying to predict, imperfectly, how streaming is going to
change the way music gets made. Like, we always force everything
into the first 30 seconds, so you can get paid
for your stream. How’s it going to change
how people get paid? The pie is bigger,
but some people are doing better than others
in the streaming economy. And how is streaming
going to affect– and I think this might be
your area of expertise– how music gets discovered? I used to listen to albums. I remember albums. I own all of these
albums in many formats, so I have all those
[? different ?] albums. But now, it’s a
playlist, and it works. If Spotify recommends
something to you, you might get turned on to it. So I think we’re in an
inflection point where we can learn from the past,
and all the disruptions that happened in the wake of
Napster to the music industry, and mistakes that were not made. And then we can also
look towards the future and try to see, when
the dust settles, what the music industry, the
made-paid-discovery aspects are going to look like. So it’s an exciting time. We have the same experience. Jen and I have
compared notes, so we both have taught a
music copyright class for about the last 10 years. And my ice breaker
question, first class, is always how did you get
your music, or your content? And exactly the
same experience– it’s morphed over time to now
where it is, not just mostly on-demand streaming,
not just mostly paid, but, basically,
100% Spotify paid. Almost 100% Spotify. Nancy? Hi, everybody. What are you doing here
as non-lawyer, Nancy? Tell us about your amazing work. I’m just trying to
get the Harvard cred. [LAUGHTER] It’s an influencer era. I need all the cred I can get. I come at this from
communication studies. I study online practices,
how people use communication technologies in everyday life. And for almost 30 years, I’ve
been following online fan community and what
happens when audiences get together and start
chatting with each other. So from my perspective,
Napster is one moment in an extremely long history
of relationships between people who make music and people
who listen to music, and, indeed, of the
idea that those are separate groups in
the first place, and, therefore, ought to be
subject to different rules around the economics of their
engagement in those practices. So if I think about
the Napster moment, I think about it as a moment
where the internet had empowered audiences to organize
at scales they had not, but they had always
been organizing ever since they got torn
asunder from the sort of, hey, we’re going to a
parade, and we’re all going to make music
together, into you better pay for this music or
else you’re a thief kind of language. The internet let them
get back together, but, also, let them really
be super scaled, so they could organize into
structures that persisted. They could share information
at a scale they never had. They could scale–
share interpretations at a scale they never had. They were forming
personal relationships. They were building identities
of experts in their own, so there were all kinds of
ways in which the supremacy of gatekeepers was being– I hate to use the word
disrupted, but it was. It was being really
challenged, that power dynamic between the people who control
the means of production and its distribution,
and the people who were meant to be consumers of it. So while I agree that we’re
at an inflection moment, I always understood
Napster as market failure. People, this is bullshit. We want to listen to
music wherever, whenever. We don’t care about
territorial licensing. This is stupid,
and it is stupid. It remains stupid. And so Spotify and those
things are a great solution to this problem. We’ve come up with solution. But I would at
the same time say, we’ve in part come
up with a solution by reaffirming that
audiences are– it’s nice if they’re
communities of certain types, but their real role
is as a customer. And they’re– belong
in a capitalist logic, not a cultural logic. That’s great. I think that’s the new tagline
for my music and digital media classes. This is stupid. It remains stupid. I’m just going to put that in
the catalog, which is great. Great words. So we’ve talked about
how massively disruptive this was at the
time Napster comes on the scene in the late 90s. Dave, as you say, you
can get instant access to virtually anything. Can you situate us a
little bit and tell us what else was going on in
terms of music distribution at the time, what the
music industry looked like for artists and consumers? And then legally,
if we want to go– we’re here at a law
school, so we’re not going to go deep down the rabbit
hole of secondary liability. Also, if we could
talk a little bit more specifically about what legally
was so interesting and complex about this service that,
again, facilitated our sharing, the individual– put the
peers, put the two individuals together, and allowed
them to share content. So can you give us a
little sense of that? Oh, sure. The thing that I
was always struck by is you have what the
marketplace does, and then the law
responds to that. And lawyers and everybody reacts
to what the technology allows. And the old business
model was very– it was a thing business. It was thingy. I go to Harvard Square,
I go to Newbury Comics, and I buy a thing. And I bring the thing home and
huddle around the campfire, like I’m putting a log
on the fire, right? And sitting there
and playing music and being stuck in a place. And I think that
with the liberation of music from containers,
and content from containers, it just opened people up to
so many more possibilities. I can go where I want to go. I can share this in a
way that I want to share. To me, it just seems like
the music industry is– at least, well, the
recording industry was the last one to– or
maybe still the last one to really listen to what people
want, and how do I do this? People still love music. It’s still this incredible
thing that just– I wear a Pink Floyd
t-shirt more because I want to let you know
what I’m about, then just the fact that I like
how this shirt looks. It’s like a deeply
psychological realm, and I think it’s going to
continue to be that way. And I just think that
the music industry was– someone stole their cheese. And so they were like looking,
we always make money this way, and we want to keep
making money this way. And they were able to make
you buy a $17 CD for the one recording you wanted, right? And so they bundled
this thing, and it was– and it was
frustrating to people. So all of a sudden, when you had
Napster and file sharing– you know what’s the peak
user base of Napster? Like 85 million or
something like that. It’s like, I talked
to my students in– at Northeastern. I say, whenever you see 85
million people doing something, don’t take out your
sledge hammer right away. Like, try to figure out
what are they doing? What’s bringing them there? What’s the value proposition? How can we fan
the flames of what they are finding interesting? And the music industry just
couldn’t wrap their heads around it. They responded in a classic,
old-school, sword-and-shield IP approach. Those are mine. Stay away. I’m going to slash you down. It was not very open innovation. A lot of the things the
internet has taught us about generativity and
the idea of the opening up to a larger community
and just learning from that. They had a really
well-defined business model that they couldn’t
get their heads around. And frankly, I don’t
know that they could have gotten your heads around it. You and I had a conversation
once about Carrie Sherman, who was then– I think he was a
lawyer for the RIAA. He was asked by Jon
Zittrain, actually, at an event at Berkman
put on several years ago, maybe 10 years ago. And he asked Carrie
Sherman, if you could– if you look back
differently at a crystal ball or a time machine, you
could go back to 2000, what would you do differently? And Carrie Sherman
said, nothing. We needed to enforce
our copyrights. And frankly, I don’t know that
they could have, in a way, responded any differently. BMG tried, right? BMG tried to invest in Napster. And what did they get? They got sued by
the other labels. It was, I think, a
possible– difficult for the labels to collaborate
and say, OK, how can we get around this and do this? The problem was, in the
intervening 10, 12 years, people began to look at
music as having no value. And so we, as an industry,
have had a super hard time recovering from the fact
that music wants to be free. It doesn’t really
want to be free. I want it to be free, but music
doesn’t want it to be free. And so how do you find that– how do you find that point? It’s been a constant
evolution of business models and analyzing the
market and figuring out, how do we structure deals
in a way that really allows us to capitalize on this? And instead of gnashing our
teeth and looking backwards, rolling up our sleeves
and looking forwards. Jennifer, do you want to
talk a little bit, maybe, about– about that,
and also, maybe, about the legal
landscape at the time? How did Napster upend this world
of contributory and vicarious secondary liability
under copyright law? So I guess I’m here to talk
about the sledgehammer. His daily [INAUDIBLE] panel. I have been thinking about,
like, if I was Carrie Sherman or I was Hilary Rosen,
the people running it. If I was in one
of the Universals, or if I was in one
of those boardrooms, would I have done
anything differently? If, A, your business model
is going really well– and it was going really well. CDs– for one song,
you had to buy a CD, and they controlled everything. They controlled CD, making it,
getting it to Tower Records, selling it. This was Backstreet Boys, Dr.
Dre, people were making money. And when your business
model looks good, a disruptive
technology comes along, it’s a lot easier to
focus on the threats to your robust business
model than to embrace the opportunities. And if you focus on the
threats, how do you react to it? You bring some lawsuits. You start suing. I do think there were
missed opportunities. There were people at the
labels– we talked about BMG– who said, hey, 60 million, 80
million, whatever, this is– this is like a
user base that you can market to, that
you can capture through a single platform. This is gold. Why don’t you
partner with Napster? But there are a number
things going on. One of the big things that
was going on, by the way, was just the MP3 audio
compression format. Napster couldn’t have
existed without that. It made music portable, the
download speeds at the time. And there were people
like Neil Young– I love Neil Young– who just were offended
by the very– the sound quality of MP3s. And there was a cultural shift,
the Sean Fanning and Sean Parker, these like geek dudes. And they just see the tech
community, the disruptive community, and the content
community were very siloed. There was a lot going on. But the missed
opportunities occurred during a stream of law suits. And the copyright
policy question at the heart of
the Napster case, and the secondary liability
that Chris was talking about, is an important question
that still resonates today, because the tension
is– so you might think, copyright law, that’s
content regulation. What can you do? How can you use content? Napster is copyright as
technology regulation. The lawsuit is
against Napster, not for Napster copying and
illegally downloading music, but for providing the
technological tool that allows its users to
infringe copyrights. And so the nerdy secondary
liability question there is under
what circumstances are we going to
hold a technology producer liable for the
infringing activities of the technology’s users
when that technology is capable of both legal
uses and illegal uses? And that’s a tough one,
because we’re always having to recalibrate this
balance between giving real, not symbolic, protection
the copyright holders, who were freaking out
at the time, and not impeding the development
of new technologies. So funnily enough, the
case at the forefront, when Napster came
along, involved the VCR. At the time, they called it the
VTR, the video tape recorder. And those of you who are taking
Chris’ class know about this, but just very quickly. When a VCR first came along, it
allowed people to record shows without permission. It looked really scary
to the movie industry, so Jack Valenti, who
was, at the time, the head of the Motion Picture
Association of America, said, quote, I say to you that
the VCR is to the American film producer and the American
public as the Boston Strangler is to the woman home alone. That’s an actual quote. And not only, this
Boston Strangler was Japanese, because
Sony was making it. And so they were
terrified that this VCR was going to kill the
movie and TV industry. So they sued, but
they weren’t suing the people who were using
the VCR to make libraries. They were suing
Sony, the producer of the VCR piece of technology. And so the Supreme
Court sat back. Secondary liability is not
in the copyright statute, so Congress has
not spoken on this. So this is a judge-made law. So in a 5-to-4 decision,
the Supreme Court, way back in 1984, said, you know
what, we’re a little troubled by this. We think we should not
really move too hastily when Congress hasn’t
acted, and there’s nothing here in the statute. So we’re going to go ahead
and look at the patent statute and import this doctrine–
it’s called the Staple Article of Commerce
Doctrine– which is, if you produce
a technology that is capable of both licit and
illicit uses, you’re good. You’re not liable for secondary
liability for copyright infringement if,
quote, your product is capable of substantial
non-infringing use. The VCR was capable of
substantial non-infringing use. Mr. Rogers didn’t care. He had testimony in
there, Mr. Fred Rogers. He said, I don’t care if
you videotape my shows, and that’s a non-infringing use. And time shifting
was [INAUDIBLE].. Sony– it’s on the books. It’s the Supreme Court. It’s the statement on
secondary liability. That’s from 1984. 2001 rolls along. Napster is in front
of the Ninth Circuit, and, well, Napster is capable of
substantial non-infringing use. There were a lot
of artists who were happy to have their stuff
on Napster, because it was getting discovered. There was public domain
music on Napster. But wait a minute,
the sheer magnitude and scale of 80 million–
whatever the number is. I’ve seen different
numbers, 60 million. Whatever the number is of the
infringement that was going down on Napster was terrifying. And so you see, during
the oral argument, you see the Ninth Circuit
trying to figure out, oh my god, how are we going
to deal with this? It cannot possibly be true
that Napster is legal. So they cabined
Sony and, basically, said Sony only applies– Sony does not apply if
the technology provider has actual knowledge
of what’s going down. Napster did. They had a centralized index. Or if they have the right
and ability to control what’s going on. All right. So that’s the long story short. But was this a victory
for the music industry? And that’s the
sledgehammer thing. I would argue no. It’s like a game
of whack-a-mole. It’s like, knock down
Napster, up pops [INAUDIBLE].. Knock that down, LimeWire. Knock that down, Kazaa. And it was like a
game of whack-a-mole. And while all these
lawsuits were going on, what wasn’t happening was
adapting to the new business model that took the intervening
20 years to really settle. So I think when I look back–
and again, hindsight is 20/20. I don’t know if I would
have done any better. But I think one takeaway is
look at the opportunities and not just the threats. And sometimes, copyright
is a very awkward tool for technology
relation, and maybe we– maybe you need to adapt. Do you want to jump in
on any of that, Nancy? There’s a couple of pieces
that are interesting, to me, from the work you do,
around, in particular, they made the statement
about I, as the fan, want the music to be
free, but as the artist, you don’t want the
music to be free. Talk about the
tension between me loving the artist that I love
and wanting to support them, and also, living in
this amazing new world of ubiquitous online
access to everything at, in Napster’s case, no cost,
and even today, as Spotify’s case, pretty low cost. I think when we
think about the idea that if you take the phrase,
music has no value, or people learning that
music had no value, I think that’s at the heart
of the missed opportunity. Music had so much value
that the 80 million people built a whole new system
and devoted their processors to sharing music. So clearly, it had
value to the fans, or they wouldn’t have
been doing all this stuff. And fans continue to do all
kinds of creative things to share music, because
music has so much value. It’s just not all,
always, monetary value. So from my point of view, the– the lost opportunity
was in imagining that controlling the
distribution of the recording was the heart of where
music’s value lies in the first place, which is
where all the copyright issues congregate, and
all the attention, and all the
conceptualization of what is value in the first place. But from the point
of view of a fan, if you hear a song that you
love, and you don’t share it with your friends, what
kind of person are you? It’s like, I know this
really great restaurant, but I’m not going to
tell you what it is because you might go eat there. It’s just being a bad human. So from the point
of view of people who listen to and
love music, it’s not just that it wants to be free. It’s that it’s a way that we
build meaning with each other and build culture
with one another. So a Pink Floyd
t-shirt has value, not because you can press a
button then hear a Pink Floyd song, but because it has all
of this social signaling, and community value, and
differentiating value, and so on. So, yeah, I guess that’s most of
what I have to say about that. I think a lot about this
hindsight 20/20 question that you all teed up. And I was at a record
company at the time, not of Napster, but a
little bit afterwards. And I do sometimes think back,
because of the narrative around it is certainly one
of missed opportunity. If only that the companies
had not sued and had saw fit to do the deal then,
that they ultimately ended up doing with the legitimate
streaming services today, it would have been
a really different– different landscape. And I wonder to what extent
we think that’s true, and what would a
deal have looked like at the time with Napster
that artists could have lived with, that the labels
could have lived with, and that consumers
could have lived with? I don’t know if anyone
has thoughts on that. Well, I don’t
think, necessarily, that the economics would
have been that far off from where they are now. It might have been $10 a month,
but the golden opportunity would have been
all the fan data. You would have
known who they were. Again, to go back to
the prior model, when I went to the Harvard coop to
buy a CD on a record label, they had no idea who I was. The band had no idea who I was. And the big deal
we’re realizing now is that it’s important to
know who your fans are, so you had that community,
so you can continue to build. Music is about– about
community, right? I don’t necessarily
think that it would have changed the economics. Maybe it would’ve
been slightly more. I think that the prices were
depressed because we had that decade where music was– you couldn’t really
charge for it, so I think the
price did go down, but I think in the
end of the day, we just missed an
opportunity to really change from a thing business to
a relationship business. And we really could have
cultivated that in a huge way. And even do tie-ins, where
the future is going to be, maybe, bundling recordings
with ticketing services and with merch, and
all the things you want to have from
your artist into deals with other companies. So that recordings isn’t just
the only thing you’re doing. It’s just a spoke in this wheel
that has a lot of other values that can tie in. Spotify is the leader now. I don’t know how many more
services a standalone streaming company– or features a
standalone streaming company can have. A lot of recordings, pretty
high quality, social feature, plays for a quick, easy
interface, not a high price point. What more can you
do really, right? But I think there are
still opportunities for us to envision what we would
want from an ideal music environment– fan data. Or like, when I
travel, I go to a town, and my phone knows what
I like, and there’s a band playing in town. And I can just go to the
club, and swipe my phone, and get in to see
the band for free. And they know who I am, if I
want to share that information. There’s a lot, I think,
that can be done in a much larger business model context. And I think that you can
look at it myopically just as how we charge
for recordings. And I think that’s not really
a wide enough perspective now. There was, actually,
a study that was done around the time
the Napster litigation was going on. And that some people
were pushing for a deal with Napster, some
of the labels that suggested that people
would have been willing to pay $15 a month. So I think I agree. I think people would have
been willing to pay for it. And one of the
arguments was that it wouldn’t be fair to our
artists if we shifted. We would have to
redo their contracts. But the fact is the music
industry has had to shift. When Apple– basically,
after Napster lost, there was a vacuum. And Steve Jobs came
in, and he’s like, I’m comfortable with
disruptive technology. Here, it’s an iPod. And they made– they made
some significant changes then, so it’s not like they
aren’t able to pivot in incremental ways. Drawing together
what you just said, and what you said about
value, yes, music absolutely has value. And the overall pie is bigger. It’s just that it’s being
divided differently. And one of the revenue
streams that’s been consistent and growing
is live performances, and that’s a kind of value. People are willing to pony– I don’t know how much you
have to pay for a Taylor Swift ticket, but I’m thinking
it’s pretty high. Maybe it’s $4.99 a
month for Spotify, but my students will fork
out $200 to go to a concert, because they love
music, and that’s– that’s an experience. That’s the good. That’s the form it comes
in, the relationship with the artist, the
merch that’s over there, the Pink Floyd t-shirt,
whatever it is, that is worth to them
the $200 to pay for it. So it absolutely has value, and
it’s just that the pie is still there, but the division
of revenue streams has changed significantly. Nancy, other thoughts on the
value– the value question? And I guess I’m thinking
about one of the– we’re talking about this moment
that we’ve arrived at where we had the Napsters of the world. They resulted in litigation. They were sued out of existence. And now we live in this world
where we have ubiquitous access to stream music. I think one of the
big questions is whether the amount of money
that’s going back to the artist is enough. Even acknowledging that
there are many other royalty streams [? and ?] many
other revenue streams that we should be
thinking about– is that a long-term problem? Is that a legacy of Napster,
and is that a long-term problem? Does that have to
change, or do the artists have to change to
adapt to the fact that recorded music
revenues are always going to be much lower than
they were in the ’90s, which was sort of the absolute
high point of this business? If you have thoughts
on that [INAUDIBLE].. Well, yeah. Of course I have thoughts. First of all, as though
royalties were going to artists in the first place– Mm-hmm. Right. –right? I mean, I think in
these conversations, we so often romanticize the
music business as before, as though the people
who wrote the songs– all the money just
showed up like magic when there’s– and of course, we
know that’s not what happened. But people were– not
only were they screwed out of their rights, but there were
active efforts to inactivity not try to find
them if they moved. So people were denied
their revenue all the time before the internet came along,
before file sharing came along. My take on this is that
audiences are always willing to pay. They’re not all willing
to pay the same amount, and I don’t think that it’s
thousand true fans formula. But prior to Napster,
we were already seeing online crowdfunding
happening for music. Kristin Hersh was living on
fan subscription for many years on a model where people
were paying $15 a year and they were getting
an MP3 every month. That started in 1996. Marillion had fan-funded
a North American tour for which everybody who had
contributed to the fan funding then bought tickets. So it wasn’t even
that they had prepaid. They had just paid twice. So– which points to the
idea that different people will pay different amounts. And I think one of the
missed opportunities that persists in the music business,
although we kind of get it with the whole superfan thing,
is that some people will pay much more. And the music industry
always set an upper cap on how much you’re
allowed to pay. And if there’s a
margin above that, it was going to some third
party, not to the artists. So you would get
people doing things like buying 10 copies
of a CD at a show, even though they already had it,
because it was a way that they could at least give
some money, and they knew that the artist was going
to get it– or buying T-shirts. When I say this super fan
thing with some dismissiveness, part of that is
because a lot of people don’t really want the poster,
and the hat, and the T-shirt. They just want to
give the money, right? And there’s not really a
way to go, don’t send me all that stuff, right? It still gets set up as
this-for-that transaction when the fact is, some people
were just willing to pay more for the same thing. I just want to follow up– [INAUDIBLE]– –quickly on
something Nancy said. I was in China for about a week,
and I was speaking at a forum there. And one of the
things I realized– I went to Tencent and saw
their corporate headquarters, and saw all the things
that they’re doing. And one of the things
I realized is how much they capitalize on
that fan enthusiasm much more so than we
do here in the States. They actually have–
during a live stream, people can just give
money, like in a tip jar as a matter of course
that goes right to the artist. Some people buy 10
copies of the same record because they know the money
is going to the artist. And I feel like
that kind of ties back into the reason
why we are drawn to music in the first place–
that connection that we have. And I feel like there
may be some ways here in the States of changing
people’s perception of the business model. Because I was a
recording artist back in the ’80s on Epic Records. And I never got a royalty. Significantly unrecouped, right? And there were– even,
like, Roger McGuinn– he spoke before Congress
talking about how the record industry worked. And he said he never got
a royalty from Columbia being in the Byrds. Roger McGuinn never
got a royalty. That’s crazy, right? But so I think, though, one
discussion I’ve heard about is this idea of, rather than
everybody’s subscription money for Spotify going into a pool
and is divided up by– you know, numerator is
your amount of streams, denominator is the
total streams– what if my subscription
money went to the artists that I streamed, right? And not go to the pot at large. That way, if I play
one artist a lot, then all my money goes right to
that artist, not to Nickelback. I mean, no offense
to Nickelback, right? But wouldn’t fans
feel better– kind of tap that emotion
that people have about buying 10
CDs at their show, because my money is
going right to the bands that I really listen to a lot. And that seems, to me, to be
a much more fair allocation of my subscription money
going to the artists that I actually listen
to than just sort of be the business model which
distributes everything according to sort
of market share. Jennifer, you got something? Well, I just want to second
what you guys are saying. You’re absolutely right. I mean, if you
look at the charts, it’s incredible how
little money, because of contractual arrangements
and other things, actually makes it
back to the people who are writing the music
or performing the music. And music has an income
inequality situation, too. There is a superstar effect. And if you look– I don’t have the charts
here, but there’s a great book from 2019
called Rockonomics with a lot of charts in it. You look at the charts, the
top echelon of superstars makes this much of their money,
and then everybody else– including Roger McGuinn,
which blows my mind. Yeah. They don’t see royalty checks. They’re significantly
unrecouped. And so there is
definitely a way to, A, make the distribution
more fair, and B, look at more artist to fan–
direct artist to fan models– cutting out the middle man. I mean, we have
the technology now to cut out the middleman, in
many cases, in which my $10 goes to the person who
I want to listen to. And I think there’s
a lot opportunity there for fans and for artists. Yeah. I would say there are
different kinds of middlemen. Because we do still value
somebody in the middle. Bandcamp would be an example of
a different kind of middleman where you can pay what you want. And Bandcamp’s model is that
they take a percentage of it. So if you’re not
selling anything, they’re not making
any money off of you. And if some fan wants to
pay $10,000 for your song, they can. No problem. I wanted to follow up, also,
on the user-centric streaming model, which is what
you’re talking about. Deezer is supposedly
giving that a try. There is a research group
out of the University of Oslo that did a lot of research
with WiMP before it was consumed by TIDAL. And they had access to all
of WiMP’s streaming data, because they were in
partnership with them. And what they were able to– they tested this
idea, and they showed, recalculating their
listening figures, that a user-centric streaming
model would make a very, very small difference for the
people who were totally at the top at this
income gap, while making a huge difference for people
in the middle and the bottom. So it’s a really
compelling idea. And then we go
back to the idea– everybody yells
at Spotify, right? But the labels are kind of
involved in these negotiations, right? It’s not like it’s all
just between Spotify and the artists. Mm-hmm. Right. Absolutely. I want to give my
friends a heads up that we’re going to
open up to the audience in a few minutes. So they’ll come around
with microphones. One thing that we’ve talked
about a couple times– we talked about sort of the
legal changes, the business changes. And then as a music
fan, we’ve talked about the need for curation
to music discovery. And I wonder if I
could talk about that a little bit, about one of
the things that Napster changed significantly is the fact that
I had access to all this music for free. It changed, obviously,
the legal landscape. But it also meant that you now
had to sift through 10 million, 20 million– whatever it is. Spotify, these days, has 40
million something tracks. The number goes up every day. Look at it. What does that mean for how
individuals discover music, find new artists? Again, as someone who’s
been a die hard music fan my whole life, I was
always talking to friends, and listening to radio
stations, and watching TV shows, and reading zines, and
then ultimately transformed into looking at blogs to kind
of find what the new thing is. How does that work in a
world with ubiquitous access to almost everything? [INAUDIBLE] Well, to me, it’s playlists
are sort of the new curation mechanism. And they know what you like. They know what you listen to. They know what you add. And behind all of
that data about you personally, they also
have Echo Nest sort of calling all this data from
however many millions of data points they had to come in. So to me, whatever mood I’m in,
I just sort of pop that mood onto Spotify. And I hear something, and it’s
like, oh, that’s pretty good. And I add that to a playlist. So I have a slight way
of getting into a zone. And then I kind of
use that as a way of sort of adding to
my personal collection. So in the old days,
you could be lazy, because it was sort of
top down mass media. These are the songs, you know. And this is what
you’re getting, right? And I loved to listen
to college radio, because it’s an amazing
college radio town. Boston was unbelievable. And you had just
this incredible diet of people who cared
a lot about music. And so that was reliable. And then, as you say, then you
had sort of the Napster effect. And then you have this
infinite sort of choice. And trying to find the right
grain of sand in the desert was impossible. And so curation is a huge
piece of that, right? And then there are a million
places you can go to find that. So I think, in some
ways, everybody maybe has their personal
method of going to either a certain sources
to get what they want. But everybody sort of has their
own little private universe, their own private
headphone Idaho, right? Where they’re– it’s great,
and it’s not as hard. It’s not as labor
intensive as surfing blogs. That was a lot of work. You know, this is really good. I like that. I’m going to download that. I’m going to add
it to my player. That was like a
multi-level effort. Now it’s just much
more readily available. So it’s curbing. [INAUDIBLE] one of the
middlemen that we still need is the curation aspect. And I find the combination
of data analytics– the vast amount of data
and human curation– to be fascinating. And it’s better
than Clear Channel telling you what to listen
to, and payola and everything. And I love college radio, too. But do you know the data
that’s being collected– they can cross-reference
what you’re listening to with
what the weather was like where you were listening
to it, what type of day it is. They can look at
what I’m listening to and look at what
you’re listening to. And if we listen
to the same song, they’re going to
recommend something else that you’re listening to to me. And so the data that’s
out there that services can use for curation, in
addition to the music genome is completely fascinating. And this is entirely anecdotal,
but I could ask you guys, does Spotify kind
of serve up things that you think actually–
yeah, I do like this song. Whatever’s going on in the
black box is working out OK? I mean, I think it’s a wonderful
time for music discovery. And it’s certainly much better
than the push model back in the days where it was
just what actually made it to the top 40 and
was playing in radio. But I think that there’s
a middleman that’s very important. It’s the human and data
curation middleman. Oh, boy. I have so many
thoughts on this one. He knows so much more
about this than me, but– [INAUDIBLE] I’m old, but yeah. No, I think that the
curation piece is huge. And certainly, curation
has shifted over to algorithmic recommendation. I don’t think there’s
any question about that. I wonder sometimes,
to what extent– certainly Spotify serves
me up gems that I like. Sometimes I find
myself wondering if it’s training
me to like music that I didn’t like before. I find myself
listening to disco. And I’m like, no, I’m a punk. I don’t know like disco,
but this song’s different. There are things about
algorithmic recommendation that I think are sometimes quite
magical or shockingly precise. And yet, at the same
time, it’s shockingly poor how much of the music I
actually don’t like, as a person with very strong
musical opinions. So yes. But also, I miss the community
of the record store who knew my tastes and would
say, this is one you need. And that really has been
made so much harder, and not just by music streaming
and the scale of ubiquity, but also by the
shift to social media platforms that have really
undermined the ability of freestanding groups. And you mentioned blogs,
which were a lot of work. But if you had a
trusted blog that you knew they were going
to be posting MP3s you had a good odds of
liking, and now you’re trusting Spotify to deliver
the right stuff, maybe that trusted blog was a
little more trustworthy. So I kind of have some
remaining skepticisms, and I don’t think we
really fully know yet the cultural ramifications
on music taste or production of algorithmic recommendation. The shift to mood is huge. Certainly, we used to
say, oh, I’m in the– I need something. I’m in that angry mood. I’m going to put on
this record, right? But we didn’t then
automatically get generated the next one,
and the one after that, and the one after that. And that, I think,
is the real shift to have mood be the dominant
entry point into defining what music we’re going
to listen to in a moment, and how our tastes’
rivers will flow. That’s a real change. The other piece that
I want to point out is that some of those
playlists are curated, but a lot of the
recommendation algorithms– it’s true all that magic
data exists out there. But in fact, a lot of the
algorithms are much cruder. And many of them are
relying on things like, users who put this
on a personal playlist also put that on a
personal playlist. So some of these things that
appear to be, it’s amazing! They’re pulling data
from 87,000 sources and weighting it in real time to
deliver you the songs you love. In fact, it’s like, well, Steve
put that on a playlist along with that other one. And you seem to like some
other songs Steve likes, so OK. It’s just an automation of the
record store thing writ large. And it still is social
recommendation underneath. It’s just a little
more automated, but still, often, I think, much
cruder than people recognize. That’s great. What mood does disco go with? Yeah, I want to hear that. Strangely enough, it– [LAUGHTER] –it seems to go with kind of
a Caribbean lounge [INAUDIBLE].. [LAUGHTER] I get French lounging
girls and disco. We’ll throw it open. Megan, then Reuben,
and there you have– and please put up
hands if you have questions, thoughts, concerns. Aaron Dunn, right there. Reuben– oh. We got one in the back
from Kyle, and over there on Aaron, yeah. Hi. I love the idea that we moved
from Napster to these streaming services for algorithm
recommendations and discovering new music. I get all this good stuff. But my concern is when I
had Napster, and I had CDs, and I had MP3s, I actually
owned and controlled them in some capacity. And I know you’ve
all probably read The End of Ownership, the book. But my concern is that
with all this streaming we have, no ownership
of this music anymore. And that’s a concern. And I know we’re
talking about curation, but what about preservation? Because if these
streaming services decide to turn
themselves off, we don’t have that music anymore. It’s not sitting somewhere
where we can access. So I think the
sacrifice is what I’d like to hear about,
because when we moved from Napster to the
streaming services, we sacrificed our own personal
collections that we really own, and control, and can
share, and lend, and loan, and all that good stuff. So I’d like some reflection
on Napster’s move in that direction. Kyle is a copyright lawyer who
spends all day long hanging out with librarians, so– [LAUGHTER] That’s a great question
about preservation. Well, it’s totally true,
and I agree with that. In fact, if Spotify loses
its deal with Universal, then a huge hunk of my listening
library kind of goes away. By the same token, I
have a bunch of vinyl which I can’t bear
to part with, but I don’t have a turntable anymore. And so– and even CDs. Are they going to keep
making CD players? So whatever form you have these
things in, as the technology kind of moves forward, you
have to kind of cascade your collection to some
new way of playing it. And so, yeah. I mean, when I went to
school, the big thing was walking in with
my record collection and plopping it down,
and then checking out my roommate’s record
collection and going, wow, you like that, too. And I was a huge– it was a physical
activity, right? Kind of going back to, like,
putting a log on the fire and sitting in front
of your speakers. And it’s a very tribal,
collective experience. And ownership was a
huge part of me kind of coming to terms with music. But it’s the end of ownership
as we know it, right? And so it definitely is– it’s not that anymore. And as much as I really used to
love going to record stores– you know it was like,
whenever we were on tour, first thing we’d go to
would be a record store to find what’s going on,
and people that we were sort of simpatico with, and just
to see what the pulse was of a city we were in. The sort of the
community is there, but the physical
space of that is gone. And I think we’re in a
post-physical era now. And it’s just one
of those things that I think, personally,
at least, it’s just sort of the nature of
technology and progress. I don’t know if it’s
progress in the way that many people would like
it to be, but it just– so the technology is
dictating how that goes. I just want to say,
absolutely, again, The End of Ownership–
great book. Yeah. But there are legal rights
that go with ownership. Most notably, copyright has
this fun little section, 109, which is the first sale
doctrine, which says, if you own something,
you can give it away. You know, I can, here. Here, David. Here are all my old LPs. Get that record player right. And that doesn’t exist. And so ownership versus rental
has significance legally. And it means it
could be ephemeral. Our stupid Sonos speaker system
that we paid so much money for will not play the
music that we own. It refuses. It’s like, we have
no way of doing this. We’re only going to play
stuff from streaming services. And it’s like, wait. The library that we spent, like,
decades amassing– so there’s a hardware connection, too. Here’s my very
expensive speaker. Won’t play the music I own. How are you to play what’s
going on in Apple music? So I think that genie’s
out of the bottle. I don’t think we
can clamor it back. I know people who still buy CDs. Interestingly, the
CD market still exists mostly for old
cars, because if you have an old car,
the only way you can listen to music while
you’re driving [INAUDIBLE].. Some people still
own their music. But I just couldn’t agree more
with what both of you said. Yeah, I think that the
genie is out of the bottle, but I think we can think
about it in other ways. Like, why is it that
if Spotify goes under, we’ve lost all the
metadata about what was in our playlists
and our libraries? If we’re all lawyers, we
should be fighting for data portability so that at
least we’ve got something we can then plug into what comes
next, or what has survived, and we haven’t lost all of that
curatorial work that we did. Yeah. I mean, a lot of
times, IP lawyers will talk about in any medium
now known or hereafter devised, right? And so if I’m going
to buy something, why shouldn’t I get a
license for any medium now known or hereafter devised? So I can take this
and go someplace– I have, like, a personal
media certificate. And I miss some
industry standard, and I get to go to another
provider with my media certificate and then have
that collection available on some other format. That’s great. Some other platform. Aaron? Hi. So my question is,
you mentioned there are some possible solutions to
get more revenue to artists, such as the
percentage of streams goes to the specific artist. And I was wondering, do you
think any of these solutions to get more revenue
to musicians would be from the
companies themselves, or could they be legislative? Because to me, this
whole revolution that’s happened with streaming
was because the music industry basically seemed
to have cratered, and was brought to
its knees, and had to sort of redo everything. So what would be the incentive
now to make those changes? Great question. And again, these
services, depending on the nature of
the service, run on a mix of compulsory
statutory licenses where the rates
are set by statute, and by an administrative
board, and market rate negotiations between content
owners and the services. So it could be a
mix of them both. I don’t know if people here– Yeah, I don’t think there’s
much appetite in Congress to create more statutory
licenses for content. Congress just passed
the music modernization, so I think they’ve
done their thing. It was unanimous in the
Senate, unanimous in the House, signed into law in
October of last year. And so to the extent
Congress is going to do anything in the
music space is been done. I think it’s going to
be market forces that– Right. –are going to be driving that. But the notion that
record labels are somehow going to pay more money
to artists, I think, is completely absurd. They will not do that. In fact, the
litigation docket is rife with artists who
are complaining that they weren’t paid properly. And then you look into
the accounting practices of these labels,
and they say, wow. That was a complete
mischaracterization of these deductions
and exclusions, and this is a total
mischaracterization of the format and
revenue stream. The labels don’t pay. They’re not going
to like to pay. Nobody likes paying
anybody anyway. I think one of the
things I’ve loved about certain aspects of
the government’s involvement in the music industry
is the artist’s share that comes from the PROs. So when my musical work
is performed on the radio, I get– my artist’s
and my writer’s share directly from ASCAP. And when my sound
recordings are played on a SoundExchange–
or a service that’s monitored by SoundExchange, I
get my featured artist share directly. If we could mandate something
like that somehow or other– but that would kind of
involve an intrusion into the companies’ private
contractual dealings. And I can’t imagine
that there would be– that would not happen quietly. Although, I think it would be
very beneficial for artists. When you asked, where’s the
incentive going to come from? I agree completely. I can’t be legislative. Among other problems, that
doesn’t solve the problem globally. But I think it can come
from outside of the industry as it’s currently understood. We’re already seeing
people who are making millions and millions of
dollars as musicians on YouTube and just completely bypassing. So I think the answer to what
would make the existing labels and publishers change their
models is that they will become irrelevant, because people
won’t sign with them, because why would
they become beholden to these byzantine
interests that are never going to come back to
them, especially if they can be part of a platform
that distributes all of their things, that includes
a tip jar where people can just be paying them, and people
are imagining and writing code for, and trying to
develop systems for. You can also click the License
This For Use In Your Film button right there. License This For My Add button. Why is anybody ever going to go
to Warner Brothers Music Group to say, can I license that
little clip from my ad? When there’s a big repository
of music where you can just click that button, and boom. You’ve got your license. So I think the forces
will come from outside of the industry
and the government. Another– yeah, Liz. Oh, that’s actually– that’s
actually– can you hear me? Yeah. There you are. A great prelude to what
I was going to ask, which was for the
panel to kind of talk about what they
see coming forward and what they would like to see
around, I guess, two things. So if where music is right now
is more about the in-person experience and going to shows,
and the content is cheap but shows are really expensive
in ways that were kind of unimaginable before, and
then that’s even before this secondary market, which is owned
primarily by Ticketmaster– which used to be illegal,
and still is illegal, in a lot of contexts, to scalp– so that’s sort of
the first question, is what do you see around
kind of how artists make money around touring, which
is how they make money, but then there’s this
crazy financial system around touring? And then the second part
is, if the experience is about being in
person, and we see all these people
with their phones up, and they’re listening
to the concert– they’re streaming
it to their friends, or they’re streaming it to a
service where other people are watching, and now we see
things like AR and VR happening in ways that seem
transformative, how do you see that shifting things? Do you have thoughts on this? Changing the nature
of live experience? It seems like the– I guess, I want to say,
just as a bracketing, that when we say that the
future of music is in touring, we’re limiting that to a very
particular population of people who have the ability
to be mobile, which automatically is
going to privilege men, is going to privilege the
young, is going to privilege the physically-abled, is going
to privilege single people. There’s a lot of cultural
issues bundled up in that. So I guess, partly, I want to– I don’t want to give up on there
being other ways for artists to make money besides
hitting the road, because that’s just a really
exclusionary model of music making that doesn’t
have anything to do with the value of
recorded music, anyway. In terms of the concert
going experience, I think there’s all kinds
of things at play right now. I think that we’re in a pretty
bad moment for live concerts with phones, because I do think
that people are documenting the experience at the expense of
enjoying the experience, often. Or they’re enjoying
the documenting. And I think that for
artists on stage, that can be extremely
alienating, because they’re not experiencing the audience. They’re experiencing
being filmed. So I think something’s
got to give there somehow. And I don’t really
know what it is. I hope that enhancing AR and
putting everybody in headsets isn’t going to be the answer. I wouldn’t be surprised
if there’s just some big old backlash,
to be honest, where, OK. The first song’s when you take
your song and then on song two, if you’ve still got
your thing, people are looking at you
like you’re a jerk. I don’t know that it’s
going to go that way. Or the recording
devices will become so– they’ll be built into what
we’re wearing, anyway. [LAUGHTER] I don’t think
that’s that far out. I mean, one chuckles,
but it’s not that far out to imagine
it’s a pin on our chest, and we don’t have to
be going like this, because this is doing it anyhow. It’s already a watch
half the time, right? So I think there’s
massive, massive challenges in that domain. But I wouldn’t want
to put all the hope for the future of music, as a
profession, financially in it. [INAUDIBLE] Yeah. So I wouldn’t, either. And there are certainly
plenty of artists who don’t allow you to record. I wonder if VR can
be a way of changing the experience of
touring so that you can provide a personal
experience to people who are not there. It probably can. It’s not very
effective right now. It’s still pretty clunky. But I can see that, with
technology advancing, it could be. I’d like to just say
something in response to maybe a larger point about
the ecosystem in general. I wish that there– and you can file this
under That’s Never Going To Happen department. [LAUGHTER] But I would love there to be
a data share with artists that are touring so that they
know if it’s Live Nation, or they know who the
fans are, and the fans can opt in so that the
artists have the fan data for the people who came. And then they can
connect socially with the fans who
were willing to pay for them to see them play live. And then that actually
makes artists grow and their communities grow
larger, which, in the end, would trickle up to the
benefit of Live Nation, because you have
a lot of bands who are benefiting from this
incredible data and information that the promoters
and venues have. So if there could
be more reciprocity of data sharing with artists
who are on the road– again, there’s privacy
concerns, obviously. But if it’s an opt-in
situation that’s kind of closely
monitored, artists could be able to
build upon the success they have one gig at a time,
and could actually maybe, even on their own scale,
be able to branch out. And you could have success. We don’t all need to be
like Katy Perry, right? We can have our own
success at our own level with our own goals. And if we had the
data that allows us to leverage what we’ve done so
far to something that can still serve our goals, that
would be, I think, a good way the technology could
support artists coming up. Can I just add
that access to data is a million miles
from being able to use that data meaningfully? And a lot of people feel very
overwhelmed by the quantity of data that’s available to them
and don’t have any sense of how to act on it strategically. At the same time,
they’re also being asked to manage every other
aspect of their career that other people
used to manage. Now they’re supposed to be
expert data scientists as well. So it’s a big ask. You’re right, but
it’s a big ask. [INAUDIBLE]– Again, back to needing other
kinds of intermediaries. Yeah, turning data into
information you can use, actually. Yeah. Yes. Some of the services the
industry used to provide are still very necessary, yes. You can have Pro Tools
and make your music, and you can put it out
there on your website. But if you talk to a lot
of artists, they’re like, I’m in this because I’m
a really good musician, and I want to make music. And I spend, like,
five hours a day responding to Facebook posts,
and managing social media, and looking at my budget. And this is not my value added. And so there’s definitely
room for other intermediaries to step up and help
with that aspect, even in that sort of
more artist-to-fan model. And definitely,
there are many things problematic if
live performance is the only way you’re
going to make money, both on the user side
who can’t get there. And also, some people are
just really good songwriters, and they can’t jump
around a stage, right? [LAUGHS] We need to
support them, too. So yeah, and I agree
about external forces. I do think more pressure
from the outside, whether it’s a tip jar, or
micro patronage, or Bandcamp, or whatever– those have a role to
play in moving things in a fairer direction. We need to wrap up,
because it is 1:00. But if people have
questions, maybe we could stick around for a few
more minutes and answer them. Please join me in thanking
Dave, Jennifer, and Nancy. This was such an honor
that I put an email out to three great friends
and said, hey, come talk about Napster for
an hour, and you all said yes, which is great. So thank you all, and thanks,
everybody, for coming. [APPLAUSE]

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