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entertainment wars
The music revolution will not be digitized
The dust is clearing from the online entertainment wars. Who won? The record labels. Who lost? Consumers.

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By Janelle Brown

June 1, 2001 | Once upon a time, a revolution brewed. Righteous artists, technologists and youthful entrepreneurs launched digital music start-ups, determined to take power away from the conglomerates that controlled the recording industry and deliver it into the hands of the little people. The dream was everywhere: Artists would use the Net to connect directly with fans and everyone would escape the tyranny of record labels and onerous contracts and overpriced CDs. Music would flow like water, and herringbone-suited executives in Hollywood offices would gnash their teeth as they finally received their comeuppance.

In those glory days, the Net gave birth to start-up after start-up dedicated to the proposition that online music had a brilliant future., Napster, Nullsoft,, SonicNet, Scour, IUMA, and dozens of other Web sites offered bold promises of how they would use the new medium to reboot the entire music industry. No doubt, much of the rhetoric was little more than marketing hype designed to give shaky start-ups a bit of power-to-the-people marketing cred, but for consumers weary of Top-40 radio and CD price-gouging, the vision was exhilarating.

Five years after it all started, the revolution is nowhere to be seen. The record labels, once railed against by those impertinent start-ups, now own their former enemies. Fiercely independent Internet companies have been picked off one by one by the same media conglomerates they once saw themselves as alternatives to. Through a brutal combination of business savvy, legal warfare and simple cartel power, the Big Five record labels have maneuvered the digital distribution industry into their control.

The process of consolidation and legal annihilation has been going for years, but the month of May witnessed an impressive flurry of activity. Vivendi Universal purchased Bertelsmann bought Encouraged by its success at mortally wounding Napster, the Recording Industry Association of America (RIAA) filed lawsuits against Aimster, a file-sharing utility that works with instant messaging software, and Launch, an Internet music site with impressive personalization capabilities. In the months previous, independent companies fell like dominoes: eMusic, Scour, IUMA, SonicNet, Musicbank, CDNow -- those that haven't been bought by their competitors have gone bankrupt or been forced to lay off virtually their entire staffs.


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Selling out, it should be noted, isn't always a disaster. It's also a time-proven "exit strategy" and is often an explicit goal for software-related start-ups. It's also hard to know how many tears should be shed for companies like and Napster; they were, from the beginning, just as greedy for profits as the record labels they lambasted. It's also difficult to argue with the reality that the studios do own the music so coveted by consumers and start-up entrepreneurs; it was always inevitable that they would fight to wrest back control of their content.

But what about all those consumers who bought into the revolutionary rhetoric and spent the last few years expectantly thrilled about the promise of digital technology: do-it-yourself radio, subscription services with all the world's music at your fingertips (the so-called celestial jukebox), personalized interactive streaming radio stations, and file-sharing services that introduced you to independent music you'd actually like? It's certainly not a victory for them that the big labels are taking control of online distribution. The recording industry's vision of the future is one in which we will all be paying $2.50 for every digital single we download or $.25 for every streaming song we hear -- and you'd better forget about ever swapping those MP3s with your friends or, God forbid, an All-Metallica-All-The-Time radio station accessible through your Web browser. Innovation is being sledge-hammered out of existence by legal threats and buyouts. It's all about control -- and right now, consumers are set to lose what little gains the Internet offered them.

The news isn't all bad for online music lovers. The indie spirit of the MP3 revolution is not entirely dead. Use of Gnutella, a distributed file-sharing program that isn't tied to a single commercial company, is skyrocketing in Napster's wake, and smaller music companies continue to burst forth with interesting ideas and amazing technologies. But the trend of events in the industry warrants caution. Gnutella's success will just make it a bigger target for an ever-more-confident recording industry, and any other company that raises its head high enough will also likely provoke a severe reaction. Meanwhile, the war is all but over for the original start-up guerrilla warriors -- those so bold to think they could cash in on a new medium without paying a price to the old regime.

Who would have imagined it? CEO Michael Robertson, a roguish gadfly who was once happiest when delivering sermons against the evils of the recording industry, is now about to start working for his formerly avowed enemy.

"It is a little on the crazy side, and dripping with irony," says Robertson. "But I guess that's what makes the Internet so darn interesting."

. Next page | A year of carnage and consolidation
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