Penn State University's deal with Napster: sweet or sour?

November 12, 2003

Last week Napster announced a deal with the
Pennsylvania State University that, simply
said, would give all students of the University free music
downloads. Although the deal sounded pretty sweet it really wasn't as
students were not allowed to take downloaded music home nor were they able to
transfer the songs to CD's or portable music
players.

This aside, thanks
to Quakester2000 and GristyMcFisty for their
tips, The Register reports about an
interesting fact. It seems that a man called Barry K. Robinson, who sits on Penn
State University's Board of Trustees, also serves as senior counsel for none
other than the Recording Industry Association of America (RIAA). A very handy
coincidence!

Penn State's deep ties to the RIAA are intriguing. Along with
Robinson, the school's President Graham Spanier serves as co-chair of the
Committee on Higher Education and the Entertainment Industry with Cary
Sherman who is President of the RIAA. Given these rather friendly
pigopolist connections, it should come as no surprise that Penn State is
leading the way with this free music service, touting it as a potential
model for myriad universities.

On the record, Penn State says it's
funding the program by tapping into its IT budget, which includes a $ 160
per semester fee paid by each student. The school sees the extra Napster
cost as a nice way of avoiding lawsuits from copyright holders and keeping
network bandwidth under control.

It is offering up a gracious form
of technology known as the tethered download to pull the system off. This
means students can stream and download as many songs as they like, so long
as they are attending Penn State and on the school's network. Pull their
computer off the system, and the songs disappear.

There is,
however, some concern among the students that their money could be better
spent on improving the school's IT resources instead of feeding copyright
cash back to the music labels for DRM-infected product.

It's just a theory, but wouldn't it be a
bright idea for the RIAA to tap its cronies at Penn State to bill this
service as a model for all universities, especially if Penn State gets
first dibs at a massive discount. And isn't nice that Napster gets to come
along for the ride? Apple is claiming 80 percent of the legal download
market. Forty-thousand students swapping files would help kick Napster's
share up a notch or two.

But for the time being, it looks like a
large chunk of the Penn State student body is stuck paying for a service
they don't really want, in part, because the heads of their school happen
to be very, very close friends with a lobby
group.

The story continues... Today, once again reported
to us by both Quakester2000 and
GristyMcFisty, The Register has
posted a follow-up story on this matter. Penn State trustee and RIAA legal
counsel Barry Robinson has denied having anything to do with the
university's recent adoption of the Napster music service. According to him he
didn't hear a word of the agreement between Penn State and Napster until 36
hours before it was officially announced last week:

The key word here is "agreement" because
it's a bit far-fetched to think Robinson had no idea of Penn State's
plans. And here's why.

Back in September, Penn State's President Graham Spanier told
reporters about his ongoing efforts to build a "music fee" into students'
tuitions. Spanier was ahead of his time to be sure, as Penn State now has
students fronting part of the cost for the "free" Napster school
service.

Spanier also works side-by-side with RIAA
President Cary Sherman on the Committee on Higher Education and the
Entertainment Industry.

So while Robinson may not have known about
the exact timing on the Penn State/Napster "agreement," it seems a stretch
to think neither Spanier or Sherman mentioned that such a scheme was well
underway. What is even harder to believe is that Robinson did not help
spur such a plan on given his uncomfortable role in both lobbing threats
at Penn State while being a trustee.

Penn State and Napster have
billed their subsidized service as a possible model for universities
around the country. Again, one has to wonder whether or not Sherman and
Robinson were made aware of these aspirations. Wouldn't both Penn State
and Napster want to check with the kind-hearted people at the RIAA about
their plans to bill this as a "model" before rolling it out. Surely,
Spanier and Sherman had a chat about the idea, and we would hope Sherman
checked with his legal counsel on the concept.

And, what if, the
legal counsel and Penn State board member actually suggested the idea
himself, making all of his cronies happy? Never. No, he only heard about
it hours before the deal passed, which is months after Penn State's own
students were told about and asked to test the program before launch.

The university says it's paying for the $ 9.95 per month Napster
service out of its IT budget. With 83,000 undergraduates and graduate
students, this would theoretically take the monthly bill to $ 830,000. In
addition, Penn State has announced plans to stretch the service to its
hundreds of thousands of alumni. Now, we're into the
millions.

Exactly how Napster plans to make money
on its service is unclear. The total of 83,000 students pulling down
millions of tethered downloads is sure to pump up bandwidth costs. This
leaves Napster turning to the 99 cent per song charge students can pay for
a permanent download.

But, as Apple's Steve Jobs has
pointed out, legal music downloading is a money losing proposition.
Apple makes its money on iPods. Napster has no atrociously high margin

hardware to sell.

So once again, with Robinson's conflict of
interests and denials aside, we're left thinking the axis of spiel pushed
this deal out to make legal music downloading at colleges look feasible.
Good for the legal Napster. Good for Penn State and its lobby group
cronies.

The Register adds that it seems Penn State is
uniquely privileged when it comes to the RIAA and the music industry. I don't
know what to add to this since basically all has been said. It will be
interesting to see how this develops, that's for sure!

Source: The Register