This article explains the current dominance that Apple exerts on our digital music experience and how it could potentially become the epicenter of media consumption. Currently, it is impossible to download, organize and listen to music without iTunes. Furthermore, iTunes has created a “network effect” whereby its immense popularity spurs demand for other artists and advertisers to be on iTunes as well. iTunes is thus cemented as the face of our interaction with digital music. This same relationship could soon exist with video media if Apple gets access to Disney’s large library of movies and TV shows. One analyst forecasts that the iPod will become a “Tivo and a music player that you can take anywhere.”

This scenario, however, may be further down the road. Hollywood still opposes distributing copyrighted material over the internet. Additionally, being the epicenter of digital media consumption is not “itself a business right now.” In the future, Apple may find a way to turn this large audience into advertising revenue, and thus a legitimate profitable business.

Importance to Thesis:

This article is relevant to my third argument, which is that Apple represents the way media companies should react and adapt to changing technologies.  Apple, through its iTunes and iPod, took advantage of the changing methods of media consumption.  By anticipating that consumers would need both a device to play their music, and an interface that makes dealing with a large library manageable, Apple made itself the name brand associated with digital music.  The dominant position both iTunes and the iPod enjoy is a testament to this foresight.  Furthermore, the position Apple is putting itself in with regards to video media is a repetition of Apple’s ability to see how peer-to-peer technology has changed the competitive landscape for media consumption.  In contrast to media companies who fight to save the status quo, Apple has placed itself where a business does not even exist, but when it does, Apple stands to benefit enormously. 

In this case, a number of different record companies came together to sue Napster. Their claim was that Napster’s peer-to-peer file sharing service was liable for “contributory and vicarious” copyright infringement. The district court ruled in favor of the recording studios and issued a preliminary injunction against Napster. Napster had to police its servers and remove all copyright infringing material. The district court monitored Napster’s progress and after three months, determined that Napster was not satisfactorily complying with the injunction. Then, the district court required Napster to shut off its peer-to-peer servers until it met certain conditions.

The recording companies argued that Napster should have to search for and block all files that infringed on copyrighted material. They transferred responsibility for locating infringing files to Napster. However, Napster argued that this modification to the injunction was vague with respect to how Napster should monitor its servers.

The court ruled with the district court and affirmed the decision to shut Napster down unless it could abide by the modified injunction.

Importance to Thesis:

This case is important to my thesis because it helps develop my second argument, which is that recording companies today are making the same strategic mistakes that movie studios made in response to the VCR.  The first mistake they are repeating is that they are acting as an industry, not as individual companies.  It is evident from the fact that five separate lawsuits were consolidated into this case that all the recording companies decided to deal with the peer-to-peer threat the same way; namely, litigiously.  The second mistake they are repeating is focusing narrow mindedly on the current perceived threat without considering how this new technology may change the competitive landscape.  By modifying the injunction such that Napster must police itself, the recording studios purposefully made it impossible for Napster to comply, which led to its eventual closure.  This indicates that the recording studios strategy was to eradicate peer-to-peer networks entirely.