Study Examines Correlation Between Napster, Album Sales

As if the actions of the three major parties involved in the maligned Napster issue don’t feed the public enough
ammunition, college students, artists, and the recording industry are being
egged on — albeit, inadvertently, by outside sources.

Last week, Reciprocal published the
findings of a study by SoundScan unit VNU Entertainment Marketing
Solutions. The survey was part of an effort to determine whether online file sharing was the cause of a two-year decline of college market album sales.

Though VNU acknowledged that overall retail sales increased between January
1997 and March 2000, album sales in more than 9,000 SoundScan reporting
retail stores within a five-mile radius of more than 3,000 colleges declined by
4 percent over the last two years.

One could argue that the statistics, if correct, could be coincidental.
However, the study did find a correlation between Internet access and the way listeners acquired music.

“Many students have high-speed
connections to the Internet, and anecdotal evidence suggested a link between
students with fast connections, the illegal trading of unlicensed music, and
its effect on record sales.”

Not surprisingly, the study even provoked a response from Hank Barry, Napster’s new
interim chief executive officer.

“The problem with the study is that big-box retailers and online retailers
are not within the area studied,” he said in a statement. “This has to do
with consumer choice to shop at large retail stores and online. It has
nothing to do with Napster.”

Eventually, Reciprocal Music’s president goes on record in the study:

“It is now clear that the controversial practices of companies that provide
directories and an easy interface to libraries of unlicensed music are in
fact detrimental to the growth of the music business and those artists whom
they claim to support,” claimed Larry Miller, president, Reciprocal Music.

But, is it really “clear?” And will Napster face a nasty backlash from all
of the negative press, the legal brouhahas and Lars Ulrich’s “kill-em-all”
attitude toward Napster members who pilfer Metallica’s music?

No, say industry analysts.

Aram Sinnreich, analyst for Jupiter Communications, said Napster’s current
position points to an ages-old credo.

“All press is good press,” Sinnreich said. “In all of this, Napster can’t
find better marketing.”

Perhaps not, but they certainly helped themselves out by sponsoring a $1.8
million tour for Limp Bizkit. And while Sinnreich said he does not approve
of pirating, he said artists could take some positives from the exposure
they are receiving from Napster,
and others of that ilk.

Sinnreich does not believe that artists’ sales will be severely tested by
the online music exchanges offered by Napster,, Gnutella and

“If Napster and have a hundred thousand users, they have a whole
community of users who are fans of all kind of artists,” Sinnreich
continued. “We’re talking about a whole community online where fans can tell
their friends about a specific band that they like. It has the potential of
helping a band go gold or platinum.”

But, surely Napster can’t be that popular? Are you kidding? Fans can
cruise to the band Offspring’s Web
to choose from an array of Napster merchandise — all proudly
displayed on the home page. The band isn’t even offering its own selection
of T-shirts and hats on its home page. It’s almost as if Napster, cute logo
and all, is being treated like some taboo cult artist rather than a

Furthermore, Offspring took its championing of online music exchanges
further. It posted a message supporting MP3 technology:

The Offspring view MP3 technology an

d programs such as Napster as being a
vital and necessary means to promote music and foster better relationships
with our fans.

Adding to its near-celebrity status, Napster also scored $15 million in
funding from venture capital firm Hummer Winblad.

Jupiter’s Sinnreich was not alone in his opinion about the potential boost
of music sales. Cyber Dialogue Vice President Peter Clemente scoffed at what
the study suggested.

“You know, the RIAA just released a study two weeks ago saying that record
sales were up 8 percent from last year,” Clemente said. “So, that doesn’t
really hold water.”

While Clemente said he was opposed to piracy, he said he is very excited at
the ever-expanding potential of sharing intellectual property via the
Internet. Clemente said the amount of success in making buyers aware of
artists online is tantamount to the success that radio had in spawning
artists and helping them sell records.

“The range of potential consumers that may be reached is enormous,” Clemente
said. “If applied correctly, the technology of MP3 and Napster can turn into
an extremely profitable business model. It’s intimate. It has the potential
of eliminating the middleman so that artists can go directly to their
consumers. The digital technology is reinventing Hollywood and we should not
lock it up.”

Clemente said a possible solution might lie in having Napster pay a
licensing fee to artists to allow the material to be shared, noting that,
had upset artists such as Metallica and Dr. Dre been consulted first, the
issue would not have snowballed nearly as much.

“Record labels pay radio stations fees to get the music out,” he said. “Why
is this any different?”

However, Clemente did say because of the potential “middleman elimination,”
he thought Napster’s days are numbered.

“They’re just not going to win against the powers that be, against the
system put into place by the recording industry years ago,” Clemente said.
“They are very resistant to change because they have so much fear and
misunderstanding of the technology. You can’t beat that system. ”

As to the multitude of people, most of which are of course college students
with limited incomes, who claim they are not stealing, the proof is
irrefutable. It is stealing. It is just as illegal as copying an work on
audio or video tape. But while this is rarely if ever addressed, what has
artists concern is the scope with which their work is being reproduced.

Metallica drummer Lars Ulrich, the self-described business man of the band,
summed his philosophy up in an interview on

I’m a consumer just as much (as anyone else) … just because somebody
feels that that CD is too expensive doesn’t give them a right to steal it,
in the same way that if I go down to the car dealership and want to buy a
new Suburban, and I feel that paying $47,000 for a new Suburban is too
expensive, that doesn’t give me the right to steal it, right?

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