Regardless of sales, the recording industry and music groups like Metallica feel Napster creates an unregulated pool of copyright infringements. Thanks to fast networks and large hard drives, college students are the biggest propellers of the MP3 and Napster phenomena. While they're clearly sharing music over the Net--Napster has clogged many university networks--they're not snapping up portable MP3 players.
Downloading an MP3-formatted tune that you might already own on a CD is one issue. When it's copied onto a music player, more rights issues arise. Arguably, one of the main ways Napster could diminish music sales is through portable MP3 players. These Walkman-like devices move those music files off the PC onto a mobile music device, often with removable media.
But e-commerce measurement service OneChannel Net finds that sales of portable MP3 players remained flat in the last three weeks of July, during the height of the Napster media craze. Furthermore, data from the retailers who participated in the study show portable player sales have declined over the past three months.
January and February sales were about 33 percent below the average of the first seven months of 2000, suggests OneChannel.net's data. After an April peak attributed to spring break purchases, sales have fallen steadily at the online retail sites OneChannel measured.
Despite the access to MP3s that sites like Napster bring, online shoppers don't seem to buy devices that might make MP3 files a replacement for CDs. Maybe Napster fans really do use the service to discover new music they'll later purchase. Or perhaps they're burning their own CDs and sticking with that format, rather than adopting the nonstandardized removable media used in portable players.
Napster and its legal controversy points to a larger retail issue of how the recording industry should distribute music over the Web and still make a profit, according to Lisa Stapleton, editor-in-chief for OneChannel.net.
Clearly, demand for digital music exists. But as major record labels roll out schemes to charge for downloads, they still must determine how much people will pay for compressed music that might be confined to a PC.