The socially-constructed nature of technology. Many scholars and observers have noted that while the characteristics (features) of a technology should, can, and do determine what consequences it will bring about, so too do the attitudes and needs of the users. Professor W. Orlikowski of MIT has noted that information technology possesses “interpretive flexibility.” She suggests that while features are important, so too are both how users view and appropriate technology and the context in which they do so. This has implications for the success of attempts to determine or evaluate the outcomes associated with any technology. This raises a related point about the socially-constructed nature of technology- one of who defines what a technology is or is not. The case demonstrates clearly the fact there were at least four or five definitions of what “Napster” was. Shawn Fanning and the folks at Napster had one idea and even that changed over time. A survey of legal documents suggests that the music industry had a view of the technology that was largely at odds with that of Napster, and at a very fundamental level. The media and the millions of users also had their own ideas about what purpose the technology should serve. Musicians also had there own views. What Napster eventually came to mean in the mind of the general and music-buying public was a function of the actions and interactions of all these groups. For more on this issue see Spitz & Hunter (2005), an article entitled “The Social Construction of Napster” in The Information Society Journal

The perils of industry concentration. The five largest record labels control in excess of 85% of the “music” that makes its ways into the record stores and airwaves. But interestingly, none of these major labels is an independent company. They have all been bought and become divisions of technology or media companies, e.g. Sony, BMG, AOLTW, Vivendi. This fact should give you cause you to wonder about the feasibility of the extant business model. Here are some questions you might have asked yourself when reading this case: If I were to start a record label today would I want to emulate the model of the Big Five? Is this industry ripe for entry because of its high levels of concentration?

The value chain of a firm and an industry. The music industry has become profitable in large part because of its ability to capture value cheaply and to control the value chain. The basic value chain consists of artists, record labels, radio stations, and distribution outlets- the largest and most important being record stores. A concerted effort has been made to drive uncertainty out of each stage of the value chain and in many ways, there is very little appreciable difference between the major players in each stage. Music consumers are attuned to artists- not to labels, radio stations, or record stores. Napster had a very disruptive effect on this value chain due in large part to the fact that there was no place for it there. You might ask yourself this question: If Napster has wanted to make its entry less disruptive, how should or could it have done so?

There is also an important issue of technological frames, i.e. how a new technology can bring about changes in the activities and functions that an industry undertakes and how it views or defines itself in relation to those activities. What we now call the recording industry was not always named such. It was the advent of recording technologies made that name both possible and meaningful. Ask yourself if there is a difference between a “recoding” artists and a “performing” artist? If you think there is one, then ask yourself these questions: what are the implications for the forms of strategy and organizing when you view yourself as being in the business of selling recordings rather than performances? Do Napster and other web-enabled technologies allow a compromise to be reached or a new set of products and services to be developed? What are the consequences of thinking of a good or service that is inherently intangible as a tangible one? Do the economics of information dictate that different distribution, revenue, and business models are now required for information goods?

There are also certain ethical concerns raised in this case. For sometime the music industry has been accused – thought seldom prosecuted – of using accounting and contracting practices that lack transparency and basic fairness. Many artists feel that the record industry has deprived them of both the ability to control their artistic creation and the right to get fairly compensated for them. Their arguments have some merit and despite what you might think of her musical abilities and sensibilities, the views of performers like Courtney Love, who claims that artists are treated like sharecroppers- are increasingly held, voiced, and heard. Then again, so are the views of Dr. Dre and Lars Ulrich (of Metallica).

Another issue that is raised by this case is one which we could phrase as a question: “Which S- curve?” Napster diffused through the population of about 40-60 millions users in less than two years. Napster spawned dozens of clones - many of which were better at performing Napster’s core functions- spurred the creation of an even larger number of related software products and services. If you wanted to do an S-curve analysis- for whatever reason- on Napster, how broadly or narrowly would you have defined it?

The RIAA has an abysmal record with regard to how it responds to new technologies. In the past it has relied on heavy-handed legal tactics, stalling, obfuscation, and lobbying. This strategy may have run its course. For quite sometime the music industry has ignored the demands of its customers for a greater variety of music, the formats which it may take, and a greater say in how modern technology can be used to create new and more satisfying experiences with the music and artists. You may want to ask yourself whether some of the original appeal and current fascination with Napster was in part due to the technology’s tapping of a deep well of resentment on the part of the music buying public? Strategic management and organizational theory suggest that firms and industries that stand in the way of technological change eventually get overtaken by new entrants and substitutes that find ways to accommodate the new technology. Do you think this will happen here?

Finally, there is also the question raised of what constitutes evidence that record sales were actually hurt or helped by a technology such as Napster, its clones, and related services. Ask yourself how you would prove or disprove the assertions by the record companies that “Napster” was hurting record sales or Napster’s counter claim that it was helping boost them. What would be your measure of “record sales”? Sales of CD singles or albums? For all artists or just the most popular ones? What would be your measure of “Napster”? The number of users, of related services, of number of total downloads in a week? What would you use as control variables, i.e. alternative explanatory factors? What would be the relevant time frame that you would need to utilize?

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