Remember Napster? Not the paid streaming music service sold last year to Rhapsody, but the original peer-to-peer music sharing service that was hugely popular from 1999-2001 when it went down in a legal ball of flames over copyright infringement. Well something Napster-like is emerging from Amoeba Music, the huge pre-owned music and video stores in Berkeley, San Francisco and Los Angeles and some musicians and vinyl junkies are up in arms about it, though I can’t understand why.

Napster was a peer-to-peer service that allowed people to share their music collections online. What Amoeba is doing with its new Vinyl Vaults service is similar in that the company is ripping tracks from old records as they come into the stores then throwing them up on a webpage where they can be downloaded, but not for free. Amoeba is charging money.

This is a business and Amoeba is taking it seriously with a reported $15 million budget for Vinyl Vaults, the idea of which is to offer the best (that is curated) out-of-print tracks that can’t easily be found elsewhere.

If you can find it on iTunes it probably won’t be on Amoeba’s Vinyl Vaults.

There are issues with the service, of course, like how are copyrights respected and who gets the money? This is where Amoeba is very different from Napster as most of us thought it to be (more on that below). Amoeba says it will share revenues with the artists if only they’ll claim their tracks and cut a deal.

So what’s the problem? Many musicians are opposed to the new service in general thinking their work is worth more — lots more — than the percentages being offered. Take a look here (warning — angry musicians ahead) for more details on what the musicians think is wrong with Vinyl Vaults. For those who don’t want to click, it comes down to a perception that the revenue is too small and Amoeba’s meddling is keeping musicians from cutting their own far more lucrative deals.

Alas, I think these musicians are deluded.  There’s a lot less money in recorded music than you’d guess.

While my work is hardly rock-n-roll, let me use it as an example. I get a royalty when this column is downloaded through Lexis-Nexis and several similar services. With well over 1000 columns available there’s a fair amount of action that nets me an average of — wait for it — $12 per quarter. This is the sort of money many musicians see from downloading, too, and they are convinced it’s a rip-off.

In a way I suppose it is, but the fact is that it has always been a rip-off for artists and you can mainly blame the record companies.  Music industry economics and accounting practices are such that few recording artists make any money at all from that part of the business, which is why they tour. Recordings build and sustain demand for live performance, where the real money is.

Maybe I should go on tour, too.

So when do the lawsuits begin? Maybe never according to my friend Clayton Moore (not the Lone Ranger), who knows a lot about such things: “Sue for what, your share of 350 copies of Monkey and the Baboon at $0.78 each?” asks Clayton.  “Sync rights rather then personal use might be an issue but a smart producer will go by the book and try and contact the licensee in good faith anyway. Musicians have known for awhile that there is no more money in record sales.  That’s what Peter Frampton says and he is selling gobs of tickets and has a recent Grammy.  Retailers are the only ones left making money from records.”

So I hope Amoeba succeeds with its Vinyl Vaults. If they are fair with musicians, anything that gets more music to more people can only be good.

Now back to Napster, the true story of which isn’t very well known. Napster’s goal was actually to do something very much like Amoeba is doing now but they couldn’t even get the record companies to talk despite offering them 90 percent (!) of the revenue. Don Dodge, now at Google, was VP of product development at Napster and tells the story of its demise quite well here.  Napster’s defeat was not especially a victory for musicians, either, though Metallica was probably pleased.

The interesting part about Napster to me was how the company was doomed from the start simply because the proposed business model relied on getting rights from the record companies that the companies, in turn, didn’t actually own.

As Don puts it, “In retrospect, the reality was that they couldn’t have made a deal with us even if they wanted to. The record labels existing contracts with the artists had no provisions for digital distribution of individual songs. The payments to artists were all based on CD sales through the normal channels. It took them several years to rewrite their contracts with artists to get to the point where today you can buy a single song via digital distribution.”

Napster never had a chance.