Makers of MP3 players distance themselves from Napster

Instead of touting the Walkman-like MP3 player as the easiest way to transport digital music files downloaded from Napster and other popular file-sharing destinations on the Web, manufacturers are now extolling their machines' ability to take photographs, keep dates and appointments, record voices, and perform other functions far from Napster's prickly copyright controversy.

MP3 player manufacturers are also eager to tout their devices' ability to create personal CDs from WMA files--not just MP3 files, which is how most Napster users download music from the Internet.

Manufacturers' move away from Napster underscores an ugly truth for the Recording Industry Association of America, the group that is most vehemently opposed to Napster: Regardless of what happens to the controversial file-swapping site, digital music is here to stay.

"Napster is just one file-sharing technology," said Jeff Joseph, vice president of communications for the Arlington, Va.-based Consumer Electronics Association (CEA). "The genie is out of the bottle, and there are still ways for the consumer to enjoy the benefits of file sharing."

Any downturn in sales of the devices caused by the demise of Napster will be temporary, Joseph emphasized. Consumers will still turn to MP3 players because they are lighter than portable CD players and less prone to skipping, making them the preferred gadget for people who want to listen to tunes while they jog, work out at the gym, or travel, he said.

Although Napster is the most popular file-swapping site, others--including Gnutella--are gaining fans. Many consumers also are changing their ideas about music, perceiving it less as a compact disc or tape that they must purchase in a store and more as a sort of service that can be delivered in several formats.

Intel spokesman Robert Manetta said his company's month-old Pocket Concert Audio Player is "format agnostic," playing any type of digital music. Like many manufacturers, Manetta was quick to distance Intel from the Napster debate. Although Napster fueled a boom in popularity for MP3 players last year, Manetta noted that digital music devices are more robust than the fate of any single Web site.

"Our player is kind of independent of any decisions made out there," Manetta said of the Napster court case. "We know that the exact model (of digital music) is still being played out."

Despite shifts in consumers' perception of music and the popularity of MP3 players, there's no question that the closure of Napster would represent a big drain on MP3 player demand, even if only in the near term. Napster's 52 million users certainly make it the most popular file-swapping site.

In fact, demand for MP3 players such as the S3 Rio portable MP3 player has been so strong that it has contributed to a severe dearth of flash memory--possibly the most coveted product in the tech industry at the turn of the century.

The CEA said it was "greatly disappointed" by a ruling Monday that gave Napster a temporary reprieve from a complete shutdown. Although the decision allowed the company to continue to operate for an indefinite period, it also opened the possibility that the Redwood City, Calif.-based company is liable for millions of dollars in damages to musicians who allege copyright violations--a move that threatens to shutter the site.

"This ruling, unless overturned upon appeal, could stymie technological development and sets a dangerous precedent for the preservation of fair use rights enjoyed by consumers for more than twenty years," Gary Shapiro, president of the CEA, said in a harshly worded statement.

"The Ninth Circuit is the same Circuit that ruled in 1981 that the VCR was illegal before the ruling was overturned by the Supreme Court," Shapiro blasted. "If that decision had stood, we would have no VCR or movie rentals--to the detriment of Hollywood and American consumers. We can only wonder if this ruling stands how technology and consumer access will be limited in the future."

Although the CEA didn't tie its disappointment to a slump in sales of digital music gadgets, experts are forecasting a short-lived slowdown if Napster dies.

"Certainly, if Napster were to go under and the recording association got its way, it might put a temporary dent in the accessibility of MP3 files," said Steve Koenig, a senior analyst at PC Data in Reston, Va. "But people who are interested in the technology are going to find new ways to share the information--even if it means downloading from black market, rogue servers. The technology is here to stay...Ultimately, the digital music movement isn't going to be fixed upon the fate of Napster."

Device makers undaunted
Quickly becoming ubiquitous at high schools and among users of public transportation, the Rio commands 50 percent of the market for MP3 players. It looks like a smaller version of the Sony Walkman and holds MP3s on a flash-memory card that can be reused. A spokesman for Rio said the company has absolutely no concerns that the closure of Napster may significantly hurt sales over the long term.

Among other companies, Hewlett-Packard, eager to capitalize on the surging demand for MP3 players, recently began to offer CD-RW drives and MP3 authoring software in almost every consumer PC it sells. Compaq Computer consumer systems include speakers with a digital audio port for plugging in MP3 players. And Dell Computer capitalized on the trend in June when it unveiled an MP3 stereo component.

Jim Cady, president of Vancouver, Wash.-based Rio, said relatively few Napster users have Rio devices. In a recent survey, only 10 percent of Napster users were aware of the MP3 digital music device product category. Cady suspects that the percentage of Rio owners who use Napster is much higher--but he emphasized that sales will not be dependent on Napster.

"We were here long before Napster existed, and we'll be here long after whatever happens," Cady said. "It will impact the industry, but I'm not sure it will impact the hardware industry that much."