Time Exec Blasts Napster, Concedes Labels Are MIA

NEW YORK (07/24/2000) - Devil! Hijacker! Pirate! These are just some of the terms that Time Warner Inc. President Richard Parsons associated with Napster Inc. -- albeit at times somewhat tongue in cheek -- Monday at the start of the Plug.In industry conference put on by Jupiter Communications Inc.

Parsons, who will be co-chief operating office of AOL-Time Warner if the pending merger with America Online Inc. comes off, spent much of his keynote address excoriating Napster, the music file sharing service that counts more than 21 million users.

Currently, the Recording Industry Association of America (RIAA) has a lawsuit pending against Napster, charging Napster with copyright infringements, unlawful use of digital audio interface devices and violations of the Racketeering Influenced & Corrupt Organizations Act (RICO). The Time Warner unit, Warner Brothers Music Group Inc., is represented by the RIAA.

Napster "undermines our traditional understanding of property and copyright law," Parsons said, because "it lets people widely share copyrighted music without regard for the legal ramifications or paying for its use." While Napster claims to act only as matchmaker for music fans who want to swap songs they've already bought, Parsons said that in reality, "the music being passed around is being hijacked."

Parsons didn't stop there, and associated Napster with the devil by quoting Saint Thomas Moore, to the effect that once you succumb to the devil, it's hard to stop. Despite his attack, Parsons did allow for some laughter, saying he really didn't mean to call Napster the devil, "it just turned out that way ... in Thomas Moore's quote."

But Parsons did take serious jabs at Napster, saying that "technology has made it child's play to steal music ... but building a business is something for grownups." As soon as Napster, which does not now generate revenue, tries to develop a real business model and make money, it will "have to deal with fundamental copyright issues."

Free music download sites, despite their popularity, will never eliminate music labels, Parson said. "What is clear to me is that the pirates cannot supplant the labels, they cannot find and nurture artists like we do."

Parson said that adequate protection of copyrighted music, including protection against copying music with technology such as watermarking (which encodes music files so that unauthorized copying can not take place) needs to be in place for online music distribution to grow and be a viable business.

But Parsons did acknowledge that part of the reason that online music distribution, despite its popularity, has not become a real revenue-producing business is because the major labels -- with their catalogs of music from leading musicians -- have not really gotten into the act.

"The record companies must compete online. The legitimate players in the business have been missing in action," he said. One of the reasons the labels have not put all of their catalogs online is that "playing by the rules takes time."

Nevertheless, it is inevitable that the majors will act, since "the Internet offers the most powerful enhancement of industry growth in history." He pointed out that each time a new music reproduction technology has come along, from the Victrola to the vinyl long-playing album to the compact disc, music sales have grown.

After Parson's keynote, Napster interim Chief Executive Officer Hank Barry defended the company during a panel session and at a news conference with Sputnik7.com LLC founder Chris Blackwell. Pointing to a recent Jupiter study that found that Napster users are more likely to buy CDs than average consumers, Barry said that "Napster is an amplifier ... (we) expose music fans to music they have not been exposed to." [See, "Searching for Revenue, Napster Signs Promo Deal," July 24.]Time Warner, in New York, can be reached at +1-212-484-8000, or at http://www.timewarner.com/.

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