GOTT NAPSTER?

Last week, indie-music heavyweight TVT Records made history—after a fashion—by becoming the first label to fully drop its litigation against Napster. It's only the latest Net-related initiative for TVT, which boasts critical darlings like XTC and Guided By Voices. Label head Steve Gottlieb agreed to chat with Hitsdailydouble about his decision to work with the Bertelsmann-driven commercial version of the online music service, and about what challenges lie ahead for the industry. Too bad he had to pitch it all to the third-grade reading level of our robo-scribe, Simon "Nothing But Net" Glickman.

Given that you filed suit against Napster in June, was the Bertelsmann deal the key to the turnaround in your thinking about it?
First of all, we started talking to Napster in November—before the Bertelsmann deal—because we were anxious to try and work on a solution. And I guess the question is, once Napster has committed to develop a secure service and come up with a route to compensate labels, artists and publishers, what's the issue? I think the question is not why did we change our mind and withdraw the suit but why isn't everyone in the world banging down their doors? They've got 45 million people, and we want to be part of the brain trust to figure out how to make it 90 million people as quickly as possible.

Well, can you answer your own rhetorical question? Why isn't the world banging on their door?
I don't want to speculate about that. But we did what's good for our artists. I can sit down with my artists and say, "This will be a substantial enhancement to your revenue stream in the not-too-distant future." I think that Napster has a profoundly unique service with no real-world equivalent. It is the single most powerful tool for sampling, testing, exploring and experimenting with music—and ultimately broadening people's involvement with music. We think people who engage in that activity are going to end up being bigger music consumers, without question, and, on top of that, I think Napster's revenue model promises to yield a tremendous boon to artists. But we were out there before Napster was willing to acknowledge the importance of protecting copyright—we were out there with everyone else [taking legal action].

So their having changed their paradigm with respect to the inclusion of rights owners is the primary thing.
It will be really interesting [to see how the court rules on] whether it's Napster that's infringing the copyrights or whether individuals are infringing the copyrights, and what level of infringement this is. Those are really interesting issues. But hey, guys, is this business about resolving academic issues about what their service was before? Or is it about reaching the public and enlivening the people's passion for music? They've made a real change, and they have a really exciting proposal, and I think people who represent creatives should be looking at it very carefully.

Have you gotten any feedback from your artists about this decision?
There's been some dialog. I don't have a scientific survey of all our artists. But my sense, to the extent that the technology issues have come up in the last year, is that as long as they feel that they're not being taken advantage of—that they're getting their fair share—they see these services as ultimately consumer-friendly. Look, I don't think the artists are much different from most of the people in the record business, [in the sense that] we were all used to giving away music. And we all recognize the importance of fans and discovery and the whole process, and that's why we compete to give away samplers. It's a question of our ability, when the time comes, to be able to monetize. And then, under a structure where there was no copyright enforcement, you never had that ability to say, "Enough is enough, and now it's time to cash in." So I think under a rubric where there's compensation and it's fairly allocated by the amount of usage, what's to complain about? Extra revenue is extra revenue.

Did you see this as a step in the transition of music from product to service, or do you see it as a parallel track?
I think there are two issues—the world we live in and the world we may live in. We were certain we were going to live in it about nine months ago. If there is ultimate bandwidth for a good price, and everyone has broadband or TSM3 or whatever that allows us to do what now takes 20 minutes in 20 seconds, then one can envision a day where we really have to rethink everything. But for the world as it exists now, I think it's clear that physical product is something very, very different and offers a very different experience from digital. And I think, regardless of the bigger issue of what happens with digital delivery and physical delivery—specifically with regard to Napster—it's important to recognize what Napster is. [Ultimately], it's not a vehicle for getting free music. It's a completely new, extraordinary experience, and as important and profound a change in the experience of music as the transistor radio, the LP record or the CD. The main reason people go to Napster is not to deprive artists of compensation. It's for that immediate access to a universal library of music.

And to be able to explore other people's collections and search for music in all kinds of non-linear ways.
Yeah. So it's a different functionality—it's not a replacement, not in this era, at least. That's one of the reasons I think it's so clear that Napster is going to be a humongous company. And to the extent everyone comes to the table, it's going to throw off tremendous revenue for all concerned, precisely because we're looking at a very preliminary version of Napster. When they really polish this thing up, when it goes into 3.0 and they add all of the bells and whistles, it's going to be so much more robust and so much more about sampling, tasting, exploring and broadening horizons. I think it's going to be much clearer to everyone that this is an experience that's unique and novel and not about depriving artists and record companies or violating copyrights. I think that's what's being lost, and I think it's being lost by people who don't actually use the service. I find it indispensable.

Looking at it from a consumer standpoint for a moment, obviously the appeal of a legal, subscription-based Napster service with all of the majors and substantial indies participating is an irresistible model. But if in fact a lot of the other majors elect not to participate because of objections that may be ancillary to the copyright question, do you think that this greatly reduces the appeal for consumers, if they have to go to various places for different labels' music?
I don't want to go there. I think where I would just leave it is that, in my humble opinion, it would be a tragedy for artists and the music industry to leave the consumer at the altar after he has so resoundingly said, "This is something that we find irresistible, important, useful, enjoyable and essential." And we want to shut that down and say no to 45 million people when the other party is saying, "We're happy to play by the rules—we're happy to make this a big revenue source for you. We're happy to give you access to these people and figure out a way where you can promote to them and use this as a way of direct marketing and all of the other bells and whistles"? I mean, that would be a tragedy. We can't take the digital revolution for granted. If anything, the dot-com bubble shows you can't take this for granted. We can still snuff this out if we are a little bit too selfish and greedy—and too interested, perhaps, in our own agendas, as opposed to really responding to the marketplace. That would be my concern.