How to be dumb

The record industry may have beaten back Napster, but at the cost of alienating its best customers.

Marketing Magazine, March 28, 2001   

“Don’t you know how to be dumb? Are you ready to take your place in the modern museum of mistakes?”

— Elvis Costello


Napster is doomed. It’s finally been cornered by the legal attacks launched by the attorneys retained by the Recording Industry Association of America, an organization that purports to represent the interests of all the major labels. Except Bertelsmann, the only one smart enough to know that it’s better to figure out some means of co-opting your biggest threat — make it your best friend, or at least let it think you’re its best friend — before you eat it.


But why do that when you can spend millions and millions of dollars on bad legal advice trying to eradicate the thing and engendering long-lasting contempt among millions of potential consumers instead? Napster did a lot more for music retailing than the other methods the record business tried: payola in the 1950s or the drugola of the 1970s, to name two of the stupider and more illegal ones. Is that, finally, what flummoxed the record companies? Even as Napster is being pinioned on the injunctions of judge Marilyn Hall Patel, its estimated 64 million users are flocking to Freenet, Gnutella and LimeWire, just to name three of the alternatives. And there will be others. Watching the record companies try to deal with Napster has been a lot like watching some Jurassic pas-de-deux, with a 40-tonne lizard with a very small brain trying to stomp a smaller, smarter, faster mammal.


Equally hilarious is hearing the record companies howl about the intellectual property rights of their hard-done-by artists — the same artists who they’ve never had any compunction about signing to contracts that make indentured servitude look like enlightened employment. Whenever an artist gets signed to a major label, everything that artist does is charged against royalties — every mile of a tour, every gallon of diesel fuel in the tour bus, every second of expensive studio time, every ounce of fourth-rate, stepped-on cocaine. Those royalties are calculated against 90% of sales, because when music was encoded as a single spiral scratch, it was etched in Bakelite, which shattered. About 10% of the 78s broke in transit. Music hasn’t been distributed that way for about 50 years, but the record companies never bothered to change that breakage clause.


Now those same lovely outfits complain about Napster eating into their profits. “How will we nurture the artists of tomorrow?” they wail. “Artists” like Puffy Combs, Britney Spears, Limp Bizkit and Marshall Mathers? If I thought I could contribute in some small way to starving those wretched facsimiles out of existence, I’d be shoplifting their CDs, posting the contents on a high-speed server and sending spam e-mail inviting strangers to help themselves. Although Napster allegedly interferes with record companies’ nurturing artists, blowing millions of dollars on legal fees somehow doesn’t. They’re probably being charged against Eminem’s royalties. We can only hope.


This shouldn’t be a surprise. At least four years ago, Musician magazine wrote a long, detailed feature explaining what was coming, and that if music companies were smart, they’d get there first — advice they ignored. Eighteen months ago “MP3” replaced “sex” as the most common search term in every search engine on the Web. That would also have been about the same time that about a half-dozen portable MP3 players came on the market. The record companies still didn’t get it.


A study by no less than American Demographics shows that Napster users are the most enviable and committed consumers that music-biz weasels could have dreamed of. They spend more money on standard retail music, for example, than their non-Napstering counterparts. Record companies hire “virtual street teams” to talk up their artists and product in chat rooms and in various other locales on the Web. That’s meant to mesh with the give-aways to folks on the street, DJs and such — so-called early-adopter opinion/taste leaders — by actual street teams.


Any half-smart record company would have figured out that you post something fans can’t get anywhere else on Napster — an alternate mix, a demo version, a live performance — with an audio commercial welded to the beginning, stuck in the middle or right at the end. Fans can’t listen to what they’re getting until they’ve downloaded it, so they’re bound to hear it at least once. And given the way product and its advertising are blurred these days, they’ll probably play the commercial for their friends, or at least it will be replicated as others share the file. The method was detailed in all those anti-drug-abuse movies they used to show us in school: “ ‘The first one’s free,’ says the pusher.” And we all remember where that marketing strategy leads. In order not to understand this, you’d have to be incredibly stupid. But if you were that dumb, you’d be working in the record business.