When Laws Work Too Well

Boy, was I ever wrong. Back in November, I wrote an op-ed in this newspaper celebrating the beginning of a new era in the distribution of music. Napster had just signed a pact with the record label Bertelsmann, and it looked as if the rest of the Big Five labels would follow suit shortly. Napster would set up a subscription service, I predicted, and you and I would never buy another CD at Tower Records again.

Well, the brave new world has arrived, and it looks decidedly like the past. Judge Marilyn Hall Patel has ruled that Napster must prevent its users from trading in copyrighted material. Last week, the record labels delivered to Napster a list of hundreds of thousands of copyrighted songs, files which Napster now filters to prevent users from trading. Intrepid users are now resorting to misspellings and Pig Latin to avoid the filters, but it's doubtful that the majority of users will ever find Napster as convenient as it once was.

Napster's predicament is a case of the law working too well. Usually, technology and business race ahead to new frontiers, while the rules necessary to constrain behavior in these areas struggle to catch up. In the 19th century, vagabonds and fools flocked west seeking their fortune, and in some places, like mining towns, they built a virtually lawless society. Only later, when sheriffs and judges arrived, did these areas begin to achieve a degree of civilization. In the 1980s, Wall Street invented new financial instruments like junk bonds and mortgage-backed bonds, only to abuse these Byzantine new securities because no one else understood them. When the courts caught on, men like Michael Milken went to jail, but not before these new securities had been so well proven that they remained useful despite the indiscretions of their inventors.

The key feature of these two earlier examples is that between the beginning of the idea and the arrival of the law there was a period of time in which people could pursue their own ends and establish the success of the enterprise. Of course, many of these trailblazers viewed laws and morals as mere distractions and acted accordingly. Nevertheless, cowboys proved that moving west was worthwhile, and in the go-go '80s, bankers proved that junk bonds were highly profitable.

Turning to Napster, 50 million registered users proved that online music distribution was a feasible opportunity. Still, the chaotic interim period simply did not last long enough. The recording industry sued Napster within a year of its founding, and with the Patel ruling now on the books, the door has officially been closed on the lawless period of Internet music distribution. No one knows if Napster's model could even produce a viable business, as Napster has been a free service since Day 1, and now with the law firmly against Napster, we may never know.

Going forward, we can now reasonably expect the worst-case scenario for digital music. As I suggested in November while entertaining the possibility of Napster's defeat, the record labels, able to work together only to squash a common enemy, will now fracture and pursue Internet music distribution separately. To download their favorite tracks, consumers will now have to register and pay at more than one music site, to say nothing of figuring out which site hosts the music they're after.

Had Napster prevailed, we could have avoided this wretched mess. With the illicit but compelling market power of its 50 million users, Napster might have muscled agreements with the other record labels similar to its Bertelsmann pact. Still tiny relative to the rest of the recording industry, Napster would slowly but surely have been transformed into a profitable way to distribute music while benefiting artists, labels, consumers and Napster itself. All this would have been possible, if only the law had worked just a little bit slower. Yet thanks to our speedy and efficient legal system, it's now highly doubtful whether Napster will ever again be as powerful as it once was, and it's virtually certain that consumers will never attain the ease of use or convenience we once had with Napster.

There's no real solution to this problem, either. Napster was founded on a legal loophole, the premise being that the company would avoid culpability by not hosing music files on its own servers. Its legal argument was based on the 1984 Betamax case, in which movie studios sued Sony because they feared VCR's would lead to piracy. The judge in that case, evincing an understanding of technology more sophisticated than Judge Patel's, ruled in favor of Sony because Sony's customers, not the company itself, were the ones violating copyright. Judge Patel, in contrast, feels that Napster actively encourages its users to pirate music, and thus closed the loophole around the company. Unfortunately, there's no software patch for a quick civil courts system and a judge with a creative interpretation of the spirit of the law.

So here we are, back to the proverbial 1998 in online music distribution. Welcome to the future!

Alex F. Rubalcava '02 is a government concentrator in Eliot House. His column appears on alternate Mondays.