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Business

Capturing Kazaa's Kids as Customers

To listen to the many voices, it appears to be the music industry’s Holy Grail; a quest beset with perils and insurmountable odds with a glowing prize at the end. How do you stop Internet piracy and save your business?

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KaZaA's free file sharing sounds great, but it's illegal say music industry leaders.

In reality, it’s more like the search for the goose which lays the golden eggs. Stopping Internet piracy is indeed a goal and saving the music industry a much desired by-product but, as highlighted by the discussion panel at Cologne’s Popkomm, the ultimate reward will be getting those who have been downloading music for free to become customers and start paying for the privilege.

The title of the panel gave it away: Kazaa’s Kids as Customers. It would be naive to think that the quashing of Internet piracy alone would save the music industry. Declining sales due to the ‘free lunch’ phenomena so frequently mentioned would of course turn around if bootleggers were stopped, but with new technology finding new ways to access music, the determined hordes would soon create alternative avenues. To kill two birds with one stone – severely dent the power of the pirates and return the industry to profitability – the record labels must embrace the generation that threatens them and give it what it wants. Instead of a prolonged and ultimately losing war, the music industry must face up to the fact that it’s more a case of ‘if you can’t beat them, join them…but make them pay for it.’

Twofold challenge: stop piracy and attract customers

The German record labels have already announced a cross-industry platform which intends to provide downloadable music files for a fee. This is, in itself, the easy part. Similar set ups are already in place such as Musicnet at AOL, while Universal Music and Apple have attempted pioneering projects to the same end. That technology is already here. The twofold challenge currently facing the industry requires the creation of new technology which hits the pirates where it hurts and improved services which attract users from the illegal sector to a framework protected and maintained by the music industry.

Mark Mooradian, Musicnet’s European consultant, believes users of such file sharing portals as Kazaa could be harnessed as customers if the alternative was better. "We can solve the problem by making a better service. It has to be easy – a one stop shop. And if you charge a monthly subscription fee of €10 a month for such a service, that’s good value. But it has to be better, faster and easier than the illegal option to work."

Providers need to combat piracy

This is a fact long accepted by the industry itself. However, a better service alone won’t stop the profits from plummeting while file sharing devices continue to operate on the blurry boundaries of the law. Dr. Martin Schäfer from BMG Germany says that a more concerted effort by Internet providers to combat piracy would be the perfect foil to the music industry’s attempts to bring Kazaa’s kids into the fold. "Providers such as AOL and T-Online should co-operate with only trustworthy partners and not allow their services to be hijacked by the pirates," he said. "By blocking certain addresses and preventing users from reaching these sites, we could provide a virtual shopping mall where only legal sharing takes place."

Challenged by moderator Tobias Kniebe on the subject of censorship on the Internet, Schäfer explained, "The Internet will remain unaffected. It would just be a contract between two businesses – the Internet provider and the legal sharing portal. This would create a security wall within the Internet. Why should a company want their product out there in the illegal domain? An agreement between trustworthy partners would force those who want illegal music to change Internet providers, someone less reputable…they aren’t going to do that."

A generation without conscience

Professor Karl-Heinz Brandenburg, a pioneer in MP3 technology with the Fraunhofer Group for Electronic and Media Technology, agrees that the Internet itself must be controlled as one part of the on-going struggle and that, in principle, improved legal services would tempt users away from bootlegging but believes that the ethical questions must also be addressed. "We are dealing with a generation of kids with no conscience, who don’t believe they are doing anything wrong. There is a huge question of legality here. There should be clear definitions about what is unacceptable and it should be clear to people that if they do these things, they will be punished."

Brandenburg added that there are so many gray areas within the music industry, about what is acceptable and what is not, that such confusion is allowing some offenders to claim ignorance. He called on a uniform agreement to define the boundaries of legality so there could be no excuses in the future. From there, he said, improved security and service could combine to move the industry closer to controlling Internet piracy and closer to turning Kazaa’s kids into customers.

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