The record labels and music news sites that benefit from reporting positive articles about the labels, talk about the billions of dollars the music industry made in the financial year just before Napster hit. So from a simple viewpoint, when Napster hit, sales of music started to decline. For the RIAA and the record labels, these two events correlate, so it implies that one is causing the other to move. But actually the sales of music have been falling for some time.
What happened during the 90’s just before Napster went worldwide was a lot of re-purchasing. This is people who had music on vinyl or cassette and they started to re-purchase the music they already owned on CD’s. These re-purchased items, in most cases re-mastered or super deluxe editions with bonus content at higher prices would skew the record label figures to make it look like new music was bringing in billions of dollars when in fact it was people purchasing old catalogue items of their favourites. And once you had those albums on CD, you didn’t really need to re-purchase them again.
Lars and Kirk from Metallica maintain that it was the right action to go after Napster. No it wasn’t. The right action was to build a business model to replace the gap in the market that Napster was servicing. That gap was basically to allow people to share their music collections (bootlegs and original recordings) in a very simple and convenient way. Napster got popular because of it, and the record labels should have created something to match it.
But the labels did nothing, and then a small company called YouTube did fill the gap that Napster was really servicing. And YouTube today, generates billions of dollars. These billions could have been in the profit and loss statements of the record labels but they messed up. Remember, we are 20 years post Napster, and Napster still gets talked about, while the record labels did absolutely nothing to counter it, except scream for legislation and gestapo like police powers.
So going back to Lars and Kirk, creating a service that allowed people to share their music was the best course of action and as YouTube proves a very profitable one at that.
The arrival of YouTube and eventually streaming services put a dent into the traditional sales model, however with the increase in people attending concerts and festivals, one needs to ask the question, did piracy assist in these increased crowds?
Iron Maiden came back with Bruce Dickinson, bigger than ever and played to sold out crowds in countries they’ve hardly sold any recorded product in. Twisted Sister and Motley Crue also came back bigger than ever post Napster and played to their biggest ever crowds until they retired. Did piracy assist in these concert attendances as well?
And what about Metallica?
Having their music illegally available on Napster basically made sure that their music was available in every place in the world that had an internet connection (it was the same deal for Iron Maiden, Twisted Sister and Motley Crue).
In other words, their music was worldwide, which of course led to more fans having access to their music and a correlation of super large concert attendances and highly ridiculous ticket prices to capitalise on their world-wide reach. Even Metallica sold out concerts in countries without really selling any recorded discs in those countries. In some countries their music wasn’t even available legally, only illegally.
And here we are in 2018, with the record labels still trying to kill the market gap that Napster serviced. In this case, YouTube is the one in the firing line. YouTube and Spotify should just become labels themselves and start financing the production of music themselves, the same way Netflix and Amazon create their own content and also license content from others. Then the argument will be different.