Making the Inevitable Pay Off

Computerworld - While the music industry is building legal dams against Napster to quell the rising tide of online file-trading, other online entrepreneurs are riding the wave with business strategies that coexist with the free flow of intellectual property.
On one side are executives at the Big Five record companies, who complain that Napster's efforts to filter copyrighted music haven't stopped the unauthorized trading of music files. They were recently joined in their efforts to squash the company by 27,000 music publishers, who may consolidate their case in a class-action suit. A collection of independent musicians and record labels are also pushing for their own class-action suits against Redwood City, Calif.-based Napster.
On the other side is another group of artists, including Courtney Love and rapper Chuck D., who contend that the recording industry's efforts to muzzle Napster have less to do with defending artists and more to do with the industry's distribution monopoly. Despite claims that file-trading undermines revenue, the artists note that the recording industry made record profits last year - in coexistence with 71 million Napster users. And musicians are still required to sign away the rights to their material in exchange for royalties of less than 10%.
Chuck D., who ticked off his record company greatly a few years ago by posting his music on the Web in MP3 files, has created a business model that uses free file-trading as a strategy. He has adapted to the MP3 economy by selling his own bootlegged records and diversifying into scoring music for movies. "MP3 file-sharing is the new radio, the new jukebox, the new way of checking things out," says Chuck D., who founded rap group Public Enemy. "Trying to stop file-sharing is like trying to stop the rain. People are going to download music, and you have to capitalize on that."
Disgruntled musicians also note that even if Napster is demolished in court, free file-trading systems that are less vulnerable to litigation will take its place. FreeNet and Gnutella file-sharing software improve on Napster because they operate without a central server to record the files that are exchanged. FreeNet also encrypts files but is limited because of the computational power needed to encrypt the data.
Ian Clark, FreeNet's 24-year-old author, may soon have the resources to develop a more refined version of the system. Intel and a collection of other funders are investing $4 million in Clark's company, Uprizer, which will create proprietary software based on FreeNet's technology.
Instead of viewing file-sharing as piracy, Chuck D. says he