David: OK. So if, all of a sudden, Napster started charging money, you think it would survive? Their current business plan where they're headed is just stupid, it's yet another proprietary secure-the-.nap file format. Do we need another one of those?
Tim: Right, I agree. I think that basically they need to accept that there will be some leakage from the system. Right now you can burn a CD, same thing. There's gonna be leakage. But what they have to do is move aggressively to say, "Hey, this is a medium in which we can expose people to more kinds of music, where we can enable a lot more try-before-you-buy, where you can figure out different ways to monetize that stream of interest." There's a lot of experience here. You look at the history, for example, of the Grateful Dead concerts -- and this is a subject I really like to bring up, and that is the sort-of moral connection between the artists themselves and their fans.
David: And you know the Deadheads came out and said, "If we catch you trading any of our files on Napster, your privileges on the Dead sites are taken away."
[Editor's Note: It's unclear what Lawrence is talking about here. This article reports on the Dead's policy that free file trading is permitted but making money off the music is not allowed, which seems to allow trading on Napster. What "your priveleges on the Dead sites" means is mysterious.]
Tim: Absolutely. And the point is that they're able to get away with that because they have a long history of a relationship with their fans in which they said, "This is what's OK, this is what's not OK." Whereas you have the record companies, which have very little moral legitimacy with their customers, saying, "We don't want you to do anything." They sued MP3.com, who wanted to pay them money! They just said, "Make it stop. We don't want people to have music online. It's threatening to us."
David: Not only that, they paid the money, over and over and over, and they still don't have the files. They've paid something like a $130 million already? I was in Toronto and I watched Michael Robertson speak at Canadian Music Week. He said, "Look, we paid the money. We were supposed to get a license. It's a year now. Where's the license?"
Tim: Right. So the point is that I believe that the music industry is partly at fault. They're training people to steal. At this point it's gonna be more difficult to get people trained to pay, whereas if they had jumped aggressively on the medium and said, "OK, let's try to use this as a vehicle." I still don't think it's something that's out of the box, but my advocacy on behalf of Napster is not because I'm saying, "Hey, all music ought to be free. I don't believe in intellectual property." I'm a big believer in intellectual property. I'm a publisher. But I also believe that you have to ride the horse in the direction it's going, and you have to look at where technology is taking us. And where technology is taking us is to ubiquitous high-speed connectivity, and when you think about that you have to come up with business models that support the creation and distribution of value. You can't just say, "Hey, we want to protect our old industry position and we're going to try to put our finger in the dike. If you do that, you lose the legitimacy with the users, and ultimately you lose control. So I guess I'm urging the music company to move forward as quickly as they can to give people that legitimate alternative.
David: You have books that you no longer publish. Would you support unlimited royalty-free distribution of those works over a Napster-type file sharing system for books?
Tim: There are a number of books that we no longer publish that we have open sourced and made available for free download, free redistribution.
David: Is it that they don't make money anymore?
Tim: No, actually it's a mix of books. Most of them are books that relate to Linux or other open-source projects where the authors were interested in having the book be as widely distributed as possible, and were less concerned with making as much money as possible. The other thing this question brings out that's a really important issue is: You have to realize that publishers are intermediaries. Music publishers, for example, seem to act as though they're the people who matter. There's the well-publicized Courtney Love speech in which she complained about the MP3 losses. She said, "Where's my share? If this is on behalf of the artist, why aren't I getting any of it?"
David: Yeah, she complained from the back seat of her limousine. Did you do the math? I mean, you're in a studio right now, and Steve is an expert. When you sat down and you really looked at that article that she wrote for Salon, the math just doesn't work. And people always quote Courtney Love. Courtney's a better guitar player than she a mathematician, I'm assured of that. I mean after looking at the article and knowing after 30 years of the recording industry what it costs to bring out a record, what it costs to record a record -- she had recording budgets in there of half a million dollars. There's not one artist that's on the charts today other than Britney Spears and the Backstreet Boys that could even command that kind of budget, let alone spend it.
Steve: Well, that's not necessarily all that true though, it all depends on the contract between the label and the artist. Half a million dollars really isn't all that much when you figure in the costs for promotion, production, music videos, etc. That money isn't just for the record, it is for the whole package. The other thing is that the money isn't just given to the artist, it's a loan that has to be paid back to the label. That is why many bands fall off the face of the Earth -- they can't afford the way the system works.