How Not to Leverage Online Community

Posted on December 14, 2006

Editor’s note: This article was written by me and originally published in the Online Community Report in 2000.  OCR went on hiatus in 2004, and when it came back in 2006 only a few of its old archived articles remained on the site.  With their permission, I am republishing this article on this site for historical interest, along with a new epilogue explaining where the story is today.

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Unless you’ve been living under a rock somewhere, you’re familiar with the ongoing battle swirling around the popular file-sharing service called Napster.   Both Napster’s critics and defenders hail the software as a milestone in the history of music; record company executives are petrified at what they see as the end of their line of work, while music fans see it as the opening of a grand piñata full of free tunes.  But, in some important ways, the real revolution in music and online community is happening elsewhere, quietly, as musicians and audiences begin to hook up without the intervention of music business middlemen and form tiny niche communities of their own.  It is the formation of these communities that could forever transform the way artists make their living.

MISSING THE POINT OF NAPSTER

The frantic record companies, in their panicked effort to kill Napster, have missed the point of that service completely.  Yes, Napster does everything they allege it does.  It does simplify the trading of MP3 files online.  It does make matches of people who want to download a certain file with people who have that file.  It does base its (tenuous) business plan on leveraging other people’s intellectual property.

There is one important part of Napster, though, that the music industry has apparently not yet realized.  In order to open this treasure chest, to root around in all the illicit goodies, a user must search for files by the name of the band he is interested in, or the name of the song she wants.  That’s it.  There is no other way to find a song on Napster unless you already know that it exists and you like it.

Think on this point for a moment.  Napster is not introducing people to music that they have not heard already.  It is instead only providing them a gateway to sample music they have been introduced to in another medium — by hearing it in Top 40 rotation on radio, seeing an MTV Buzz Clip, or whatever.  And how does music come to the attention of the public via these other media?  Through record company promotion, that’s how.  Other than fiercely independent artists like Ani DiFranco, working to make a living on the fringes of the system, the artists you discover through these media are all bought up by record companies lock, stock, and barrel.  And each new user who signs on to Napster is having the message reinforced in their mind that these artists are the entirety of the musical universe, that the edge of the earth is just beyond the last page of Rolling Stone magazine.

Napster isn’t the end of the music business.  It’s the greatest music business brand-building tool ever invented!  For without these vital middlemen, Napster would be completely non-functional.  How would we know what to search for on Napster if it weren’t for all those nice A&R men out there telling us what to listen to?  We wouldn’t.  Napster’s complete lack of alternative search mechanisms such as community filtering makes it utterly reliant on the publicity machine everyone expects it to destroy.

The record companies shouldn’t be afraid of people stealing music they own; they can always make money off those brands in a thousand ways other than pressing CDs (something any ten-year-old can do on Daddy’s PC today anyway).  What they should be afraid of is people wanting to listen to music the record companies don’t own!  There’s no revenue stream to be had there.  And the real story in Internet music and online community is the way that, slowly but surely, that threat is becoming more real.

THE DIVA AND THE DORK

You probably don’t know who Sarah Lentz is.  That’s OK; neither did I, until recently.  And then while clicking through MP3.com one day, I found her page.  A quick perusal gave me the 411; vocalist and pianist, struggling indie artist, known for striking, deep voice, plays clubs in New York City.   Intrigued, I took a listen to one of her songs, "Disintegrate".   A few minutes later, I was downloading all of her songs, and they got my attention enough to lead me to order her CD.  In the space of a couple of days, I’d gone from not knowing who Sarah Lentz was to being a huge fan of her powerful, moving voice.  (Go on, listen to the song already!)

This is what should terrify the record companies.  Because every Sarah Lentz I discover on my own leads me one step away from their paradigm, in which I need a big corporation to lead me by the hand to the approved artists I should like, and one step closer to declaring independence and disintermediating them once and for all.  After all, that would be best for both Sarah and me; Sarah wins because she gets 50% of all sales of her MP3.com CD, which is orders of magnitude more than she would make through a traditional record company deal, and I win because her MP3.com CD only costs me $6 (no A&R men to pay at the first of the month, natch) and her full album only costs $10.  Compare that to the prices of CDs at your local Sam Goody sometime and you’ll see what I mean.

What the record industry has forgotten is that its greatest asset is not its recording studios or back catalog.  Its greatest asset is us, the audience — the community that has formed around its product.  In a way, music was one of the first virtual communities; the industry provided us with a safe place in the analog cyberspace of gramophones and 8-track tape players to meet new artists that we could be reasonably certain we would enjoy.  In exchange for providing that space, however, they extorted a dramatic toll from artists and listeners.  Now they are terrified that they might be losing the traditional revenue stream that community has provided them.  What they should be worried about is what will happen if one day the Napster users discover MP3.com and decide they don’t need that safe space at all.  Then the Sarah Lentzes of the world will finally get paid what they deserve, music will finally cost about what it should, and the only people who will weep when the community closes its doors for the last time are the newly unemployed A&R men.

As we all know, virtual communities evolve.  Some remember the glory days of the WELL.  Others reminisce about GEnie, or CompuServe, or FidoNet.  All these networks are still around, but their audiences, for the most part, have moved on, because they found a better value proposition somewhere else.  The old CompuServe executives would probably have bridled at the suggestion that someone use AOL Instant Messenger or some such widget to chat on-line while connecting through CompuServe.  After all, CompuServe had chat tools of its own, right?  And yet, wouldn’t that have been better for them than what happened:  mass migration of their user base to AOL?  Well, today AOL owns CompuServe.  That’s a lesson that the music industry should take to heart when it considers what to do about Napster.  In the end, losing one revenue stream is preferable to losing them all, and half a virtual community is better than none.

EPILOGUE (December 13, 2006): Well, today both Napster and MP3.com are gone (or the good old versions, that is; both names were later re-used to brand much less compelling services).  But the world of music online is more vibrant than ever; the iTunes Music Store proved the business model, and indie labels like Magnatune are practicing what I preached in this article six years ago, with success.  In retrospect, we can see Napster for what it was: the "tipping point" where the music market started to change for good.

How big was that change?  Sam Goody, the national chain of record stores I referenced in this article, essentially no longer exists; most of their locations have closed, and the owner is folding all the remaining locations into their FYE retail brand.  So long, Sam.

The music business never did figure out my point about how they could use Napster to their benefit, but the video business, faced with their own Napster problem from YouTube, seems to have: CBS, for example, has its own branded space on YouTube, and credits the service with a 5-7% increase in viewership for its late-night talk shows. 

Oh, and Sarah Lentz is still singing.  Cool story: a
year or so after this article was published, I got an e-mail from her.  She had found the article while doing a Web search looking for reviews of her stuff, and just wanted to thank me for the kind words I had for her music.  How cool is that?