At this point, my e-mail correspondents interrupt and say, "C'mon, we all know Napster is just an excuse for people to avoid paying for music!" That's no doubt true for some portion of Napster users, but it hardly tells the whole story.

I think the most common reason people use Napster isn't that they're cheapskates or thieves but that they're impatient and bored. They know that finding and listening to music online can be convenient. They know that the music industry has dragged its heels and blocked ways of offering that convenience -- and Napster has delivered it.

Which brings us to the question of what the music industry should do. There's no question that, if the record companies had spent the last few years in a full-bore effort to deliver their products online in innovative and easy-to-use ways, they wouldn't be in the pickle they're in today. Instead, paralyzed by fears of "giving away" their intellectual property on the Net, they have mostly stood idly by -- while technology evolved to make their worst fears come true.

That's history now. What's a record label to do today? My first advice to the music business today is, accept reality. You may wish that digital technology did not exist and MP3 were a meaningless acronym, but you can't turn back the clock.

Accepting reality means accepting technological changes. Just as technological changes in the past have enabled the music industry to boost its profits (as with the transition from vinyl to CD), changes today almost certainly mean the music industry will have to tighten its belt.

The very first act a smart record company today would take is to lower CD prices. Music is no longer a scarce good; you can't get away with charging high prices forever. And you certainly can't get away with absurd prices for music downloads, like one label's plan to sell individual tracks for $3 and entire downloadable "albums" for $18. (That's a great trick -- "Pay us a few dollars more and we'll give you less!") If you treat the public like suckers, the public will eventually stop giving you business.

Would lower CD prices mean lower profits? Maybe so. Savvy music CEOs today should probably have downsizing plans ready to go. Record companies are middlemen between musicians and audiences, and middlemen tend to have a dwindling role in industries that are being reshaped by the Internet. There's a place for record companies in the world of Net music, but it's different from their current role: The record company will need to retool itself as a service organization -- serving artists on the one hand, who will ultimately abandon the middlemen unless they get better deals, and fans on the other, who still need reliable sources of high-quality music but will readily turn elsewhere if the traditional suppliers fail them.

It shouldn't be impossible for record companies to devise convenient, easy-to-use online services that make their treasuries of music available to listeners at low (but not zero) cost. After all, Napster was invented by a lone 19-year-old. But such services will only work if they view the characteristics of the Net as advantages and opportunities rather than threats. Online music services should allow us to listen to our music from many devices and locations; to sample new music easily; and to see what other fans are listening to, so we can turn one another on to what we love. If the record companies don't provide such services, some 19-year-old will.

The music companies can take their resources today and spend them on lawyers and legal battles with their own customers in a futile effort to preserve their threatened profit margins. Or they can begin the hard but rewarding work of building new businesses around new technologies. It sure looks like they're choosing the former route. If they stick to the narrow turf of copyright law and cede the wider terrain of new technologies and businesses, they may eke out a short-term advantage, but they will ensure their long-term irrelevance.

Copyright law is meant to preserve material incentives for creative work. But no law on the books ever granted absolute protection to today's business models and distribution technologies -- or guaranteed an industry's profit margins in perpetuity.

The Free Software Project
Read Andrew Leonard's book-in-progress on Linux and open source -- and post your comments.