These days, if you're a digital music executive worth your weight in salt, you've got to do a lot of talking about Napster. Time and time again, in RIAA depositions, at Senate hearings, and during news interviews, the heavyweights of the online music world -- Michael Robertson of MP3.com, Hank Barry of Napster, Gene Hoffman of EMusic, Gene Kan of Gnutella -- are stepping out to opine on the legality of Napster and its importance in the future of digital music.
But one high-profile exec has remained relatively silent: Rob Reid, CEO of Listen.com, the Yahoo-like directory to online music. While Napster and MP3.com and the RIAA bicker publicly about piracy, his company has been quietly growing, creating directories and guides to over 100,000 artists who have legally posted music online, nailing down partnerships with the five biggest record labels, and nabbing over $100 million in funding.
Last week, however, his company suddenly went public with its own Napster spat. On Tuesday, a mini-drama ensued when Listen.com demanded that Napster remove a portion of its Web site, which appeared to copy Listen.com's "genre tree" directory, a categorization system that breaks music down into genres like "outlaw country" and "dream pop." Napster removed the offending tree from its site, and yet another lawsuit had been averted -- at least for now.
But it seemed as good a time as any to get Reid on the record with his thoughts on the digital music revolution and the Napster battle with the RIAA. His take? "This is the O.J. trial of the Internet," he laughs; but unlike his compatriots, he is loath to join the Napster-bashing.
First off, what happened with Napster last week?
I can't really comment on that. But it appears that our genre tree appeared on the Napster site. Our genre tree certainly has some plain English words in it, like "rock." But it also has some genres that we quite frankly believe that we invented the terminology for, like "darkside" under electronica, just to use one example. We actually have subcategories that didn't end up on the Napster site. But at least two levels of our genre tree appeared to appear verbatim up on their site.
It would be one thing if we were using sort of a public-domain categorization system that was used throughout the world that said "rock, jazz, classical" and nothing else. No, we have hundreds and hundreds and hundreds of genres, and a very large editorial team that has spent many, many person years putting them together and populating them.
Given that this was done without attribution, without permission being asked, this seemed to be a rather flagrant violation of copyright law, that's what we noticed and that was upsetting.
Why did you create that genre tree in the first place?
Basically, we have a notion that the range of music that's available to people is absolutely in the process of exploding beyond any precedent or parallel. I would guess, without knowing the precise number, that you could probably go to the biggest music store in San Francisco and find fewer than 10,000 artists. There's over 100,000 artists in our directory, however. And I would expect that there are going to be over a million within a couple of years.
And so the notion of "rock, jazz, classical, hip-hop" as being sort of an adequate level of granularity with which to categorize music -- while I think that it works fine in a music store environment -- doesn't work well on the Web.
What did you think of Orrin Hatch's statements this week in the Senate hearings, that record labels needed to release more music online, and if they didn't the law might force them to do so?
They were intriguing and surprising. It's one very, very influential person's opinion, expressed in passing in a single hearing of a single committee. How do you go from that to being the law of the land as instituted by Congress? I'm not an expert in political science but my guess is that's a many, many, many year process. And there are many other voices that would probably be contrary to that.
But do you agree with him?
That the labels have been reticent in releasing their music? I disagree vehemently that the government has any role in defining this landscape. And I personally believe in the role of markets and their ultimate efficiency. I believe that economic players ultimately will not listen to the vehement opinion of tens of millions of their customers and ignore it for years on end.
I think it's very, very clear that the correct way to fight piracy would be to make those things that people are pirating available conveniently and safely and at a fair price. And when that happens -- and I don't think it's a question of if, I think it's a question of when -- then the consumer and the markets will be faced with a question: "Wow, here it is safe, legal, available at a fair price." And we'll see which way people go.
But I think that rational economic players will make that happen as opposed to having a senator command them to do that.
What do you think a rational price is? I was on CDNow the other day, looking to buy an album, and they did offer the ability to download it in an MP3 version for $2.99 a song, and I almost choked.
Yeah, I think it's preposterous. I think music will ultimately feel free to people. And I don't think that means they don't pay for it. I think they do. I'm personally a very strong believer in the rise of the subscription model. And I use myself as an example. If there were a little meter sitting on top of my TV that charged me four bucks an hour for watching it, I'd probably be paying less per month for TV than I currently pay -- because even though for some inane reason I actually do subscribe to cable, I probably watch TV for about three hours a month. But it would still infuriate me, and it would feel expensive as hell and I'd hate it.
Whereas now, when I get to sit down with the rest of America with my takeout meal on a Wednesday and watch "Survivor" it feels free. It's part of the infrastructure of what I pay for every month.
So what do you think this means we've learned from Napster?
Napster's made it really clear that people are ready to access music digitally. What else does it show? Obviously, free is a compelling price point. I think what's more seductive about Napster than the freeness of it, because some surveys have shown that people would be willing to pay for it, is the fact that the marginal cost for a song is nothing. If I have gotten to the point where I stomach that, yeah, I'm willing to spend X dollars for an extravagant range of music in my life, and it doesn't cost me every single time I go back to the till, I think that's something that people are going to buy into. And what's the price? Is it 10 bucks a month? Is it 15? Is it 20? We don't know until we start offering it.
But that's where I think the market [clearing price is]. And I think it's a long transition: We're talking 10 or 15 years from now, when there's a true ubiquitous digital music distribution infrastructure. But when that day comes, I don't think people are buying music a la carte anymore.
Do you think this is the approach that the record industry should be pursuing instead of trying to shut Napster down?
I think pursuing the development of a subscription model is the right answer for everybody right now.
So you aren't of the school that wants Napster to be shut down? You sound like you're of the school that thinks that a compromise should be found.
I tend to stay kind of mum on that. I think that if there were a ditente between the music industry and Napster, it could potentially be a very powerful thing for both sides. The issue is, it's not a question of five companies facing off against one. There are hundreds of companies. There are literally hundreds of independent labels. There are dozens and dozens of publishers. There are thousands of songwriters. And we sometimes forget that we're not the only country in the world. There are 180 countries that all have their own rights mechanisms.
And so I do believe that this situation is so unbelievably complex -- it is more than Napster and five major labels -- that it's hard to see an easy resolution of this without an act of Congress.