Net Effect: Are CDs dead? - Business Courier of Cincinnati:

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A veteran of the Cincinnati musid scene, Breen has been in retail sinc thelate '70s. He's weathered plenty of changed but doesn't know how to cope with the curren threat. He says the latest big change facing the musicindustrgy — programs that let people download music off the Internet and CD burners — could be what pushez local store owners like him to extinction. "The record industry is over," he said from his Fort Thomasa store. "It is taking a hit like it hasnevere had.
" Programs that let people swap music on the Web and burn CDs have etchedc a deep scratch into the profits of some localo music stores and are ignitinv a fierce debate about copyrigh laws. "The record industry is free falling," said who owns Phil's Records in Fort Thomas and Crescentg Springs. Supporters of file-sharing services, like KaZaa and , claimm they help the music business by pushing music fans to buy samplesd they get from the They get this sample by hookinh up to the computer systems of other KaZaaq orLimeWire users, a tech term called peer-to-peer file Breen isn't buying it.
CD sales at his stores are down aboutf30 percent, said Breen, who credits file-sharinyg programs with "killing the music He doesn't expect things to pick up duringv the holiday season. He reasons that shoppers aren'rt putting CDs on their holiday listbecause there's no use buying somethinv when you can get it for free. In the he's had to learn to operate on aleanetr budget. He used to have a stafft of at least three people working atall Now, it's just him during the day with some help in the His profits are down, but other aspects of runninfg a business such as rent and insurancew have continued to escalate.
"Thre record business is hemorrhaging," he Others aren't so adamant. At Spin Againn Music, owner Sam Seiler said his which primarily sellsused products, has coped with the new technology by diversifying its products. Spin Agaib now sells DVDs and somenew CDs, an area wherre he's also seen a drop in profits but not as harsy as the dips experienced by Breen. "It's not going to kill Seiler said. Ken Katkin, an Internet law professor at theSalmohn P. Chase College of Law at NorthernKentuckt University, claims one reason the record industry will survives is because it hasn't been prove d that file sharing is causing a drop in And it won't be, either.
The recording industryy got its first tastes of file sharing on the Internet withthe media-swappinv service Napster. Napster operated its file-sharing serviced through a central servert that took all saidPhilip Corwin, who works as a lobbyis for Sharman Networks, the Australian firm that owns KaZaa Mediq Desktop. Because there was a central Napster had knowledge and control aboug what wasgoing on. This led to California's 9th Circuit Court of Appeals finding it guilty of wholesaled copyrightinfringement — a decision that prompted the developers of software like KaZaa to not use a centra l server. Users connect to the computers of other users andsharee information.
A spokeswoman for KaZaa said the softwared has been downloaded more than 150milliob times. Neither the developers of KaZa nor Sharman Networks has any way to track what is done or who does it a huge legal difference accordingto Corwin, who compares KaZaa's file-sharingg system with sending attachmentsw via e-mail or instant messaging. He claimxs Sharman has been targetedbecause it's a small companyy based offshore. He said Sharman can't be punished for providint software. "It would be like arrestinhg General Motors because someone has robbed a bank with one oftheir cars," Corwin said.