College kids gobbled
up Winamp. One of its features allowed users to make their own "skins" --
decorative wrappers for the player so it could take on the look of
anything from Daisy Duke to Marilyn Monroe -- which increased its
grass-roots support and its exponential growth. Naturally, the trading of
MP3s skyrocketed, since people wanted stuff to play in their cool Winamps
-- much to the distress of record companies, which suddenly saw more
piracy than the Spanish Main.
An entire generation of college students is coming of age believing
music is a free medium. Today's 20-to-24-year-olds are buying a third less
music than the same age group 10 years ago, according to the Record
Industry Association of America (RIAA). Hyped by the press and endorsed by
musicians who see themselves as stuck in unfair contracts with greedy
record-industry moguls (see "Steal This Industry"), MP3 has emerged as a
kind of post-punk coolness indicator. On college campuses that offer T1
lines, as many as 75% of students have engaged in music piracy. "The
Internet has made music so vulnerable," says RIAA general counsel Cary
Sherman, "[that] if it were left unchecked, you would eventually reach a
point where the pirate market would supplant the re al market."
Ah, but until very recently there was no real market online. The MP3
boom thrived in a virtual capitalist vacuum, with no competition from the
forces of free trade. Yet thanks to Frankel, Winamp and all the other MP3
players that have come along, the musi c industry has suddenly and
wrenchingly been forced to retool its entire business and compete.
That's why the Wild West days of Justin Frankel and MP3 may be coming to a close. The music industry first tried to stop the onslaught of digitally downloadable music by sweeping the Net for pirate sites and filing suit against hardware manufacturers like
Diamond Multimedia, but now it's singing a different tune. It sees
digital music as the next great revenue stream -- maybe clearing $4
billion a year by 2004, according to Forrester Research. Within the next
few months, music will be available for sale o nline from most major
labels. Some already is. Sony Music, for instance, began releasing singles
on its website this summer. At the same time, a new generation of portable
MP3 players is flooding the marketplace (see Beam Me Down).
