Lessons from Rock and Roll, Vol 2
For tonight’s performance, the role of Napster will be played by Bitcoin
Even though I felt like I was one of the ones that ‘saw Napster coming’, I don’t think any of us could have predicted the speed and the totality with which it took over.
To me and a lot of my colleagues, Napster was our first lesson in the power of the network effect of the internet. Capitol Records was very early on the internet, and had done some cool stuff with artists like the Beastie Boys that turned people’s heads and engrained the Beasties into the culture in a way that out punched anything that anyone else was doing at the time.
Sure, some indie labels had done cool stuff on the internet, but the monoliths that were the major labels at the time were glacially slow. They had set up a business that worked just fine for them, thank you very much.
Napster fundamentally changed the way people interacted with music. Suddenly, there was no need to go to Best Buy, Target, or Blockbuster to get music. You just went into your computer and you got it. You no longer had to buy it. It just appeared.
Sure, the fidelity wasn’t as good, and the process was clunky at best, but there was no longer any reason to go buy that song you just heard that you loved. Further, there was no need to buy an album (the ‘unit of measure’, if you will) to get two or three songs you liked. The music just appeared.
This created a fundamental shift in the thinking of the consumer. They still wanted music, but they no longer needed to pay to get it.
I would say in a period of 18 months, right around the turn of the millennia, anyone under 18 suddenly viewed music as a free value add to their lives — it was not something you paid for. I can’t emphasize enough how quickly this seemed to happen to us in the industry. It was like you snapped your fingers, and suddenly the demographic that had been your best customers for decades simply stopped paying for your product.
Now, let’s take the above and apply it to money. To be clear, people don’t need music. Everyone needs money to live their lives. They may want music, but they don’t need it. That said, what we’re experiencing now with Bitcoin and digital currencies feels eerily similar to the Napster era.
For hundreds of years, conventional thinking was that you needed banks to control the flow of your money and to do the transactions that kept a roof over your head and food on your table. All the while, these institutions took a tiny little piece of your money at every waypoint. This is a business model that works just fine for them, thank you very much.
The last decade or so, it’s become clear that the technology exists so that you can manage your own finances, and Bitcoin will be the gateway to fundamentally changing the way people interact with money. You have the ability to decide which gatekeepers to pay which fees to and how much you’re willing to pay to transact the business you need to.
Using Bitcoin and other digital currencies is still clunky, but so was Napster in 1999. Anyone remember downloading your favorite song, only to find out the hard way that the file was actually a virus that ‘bricked’ your computer?
While the process may be clunky today, each day that passes, this process of using digital currencies to manage your life becomes a tiny bit easier. One critical difference to understand about this time around is that this is not 14-year-olds on their parents Gateway desktop computer embracing this technology. It’s adults. Not only adults, but some of the brightest minds and in some cases very influential adults.
Make no mistake, governments and central banks are not going lightly into the night on this one. Their control of money, the money supply and how most commerce is conducted is critical to their ability to control society as a whole. In the 90s, they cared about artist copyrights, and indeed passed legislation and aided in the process of shutting Napster and similar services down. But the genie of file sharing was out of the bottle, and the record business was never the same. They cared about copyrights, but not like they care about money.
Governments and the like know the genie is also out of the bottle on Bitcoin. I will be shocked if ten years from the date of this writing, that well over 50% of the governments of the world aren’t using their own digital currency. Conveniently provided with banks that take their digital ounce of flesh at every waypoint.
But, what if you had a choice? What if you could use the ‘DigiDollar’, but could also transact your life in a way that was completely personal to you and not reliant on anyone or anything else? Now what if you trusted that new process? Would your mindset shift as quickly as your 14-year-old self did once you discovered that you could get ‘Oops!… I Did It Again’ or ‘Big Pimpin’ in three minutes, for free without leaving your house? I suspect it might.