Facing the Music - The Big Labels and Hollywood vs. Napster and the New Technology: Online Music Case (A) (B) (C)

Piracy and illegal downloading are just the main threats that now seem to be besetting the music and motion picture industry on all sides. The Roland Berger Chaired Professor of Business and Technology Soumitra Dutta examines how the "Big Four" record labels - who together hold 75% of the world market - have responded to Napster and all that it represents to them. Hollywood has been watching closely. But new downloading technology means that they might soon be in largely the same boat.

by Soumitra Dutta

Case (A): Napster Faces the Music

Few industries anywhere are so heavily dominated by a few key players as is the international music business. Last year, the "Big Four" of EMI, Sony-BMG, Universal and Warner held a staggering 75% of the global market. But computer technology; the anti-corporate attitudes of many popular music fans, and the lure of being able to customise one's own song choices have proven a profound threat to the Big Four's ability to maintain any tight control over product distribution whatsoever. The Roland Berger Chaired Professor of Business and Technology Soumitra Dutta's (A) study details the challenges now besetting the music and motion picture industry on all sides.

Napster, the Internet P2P song downloading and file-swapping service launched by a teenage American college student, briefly managed to become the Net's fastest-growing application in the late 90s, attracting nearly five million users before the US music industry's main lobbying group persuaded the courts to shut it down. The intense media publicity generated by Napster's legal battles saw recording artists and fans split deeply and passionately over the issues of copyright infringement and consumers' rights to choose. Many anti-downloading musicians alienated their fans who, while mostly acknowledging that what they were doing was illegal, simply didn't see it as wrong.

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