The bottles are disappearing and the RIAA doesn't like it.
When you purchase a copy of a piece of music, it is generally accepted that you can make additional copies for personal purposes. The Recording Industry Association of America (RIAA) has publicly disagreed with this, but I'd argue this falls under Fair Use. More precisely, when you buy a record, you're really obtaining a license of sorts to do certain things with it: this could include listening to it in your car, office, or home.
Until recently, the music (the wine) was carried around in some hard media such as CDs or cassettes (the bottles, to use John Perry Barlow's analogy from The Economy of Ideas). What happens in a world where the bottles disappear and only the wine is left? How does the ability one has currently to carry a CD around to listen to music anywhere they wish translate in a world where CDs don't exist?
mp3.com came up with an extremely elegant answer to this question. The introduced two services, the Instant Listening Service, and Beam-it. The key idea behind both these services, which has raised the ire of the RIAA, is that mp3.com maintains a huge database of songs (where the copyrights in the sound recordings are mostly owned by the RIAA members) and it allows users of its my.mp3.com service to create a personal catalogue of all the CDs a person has access to (by cross-checking its database with a disk placed in the CD drive in their computers) and listen to them anywhere in the world, virtually. This eliminates the need to carry CDs and CD players around.
What mp3.com has also done, and which I've not seen pointed out, with this service is set a standard for a new economic model based on free distribution of music based on the service model (akin to Red Hat which does the same with the free operating system Linux). The model is still in its infancy, and I'm sure we'll see mp3.com capitalising on it in the future. Simply put, artists revenues cannot be based on per copy sales to the consumer but rather on a share of a service-oriented method of doing business, including taking advantage of the knowledge of ever user's musical tastes. To quote Barlow again, "Nature abhors a vacuum and so does commerce."
So what's mp3.com doing that's under attack legally? The primary problem lies with the fact that they have a database of over 45,000 albums stored on their servers in mp3 format. Creation of this database could be considered copyright infringement in and of itself, and making it available for commercial gain doesn't help matters much. The legalities of this issue is up to the courts to decide and I applaud mp3.com's bold stance in this arena. It's one thing to pay lip service to forward-moving technologies that threaten the very existence of copyright law as we know it, and it's another thing to embrace and improve those technologies and make the law submit to the new ways of doing things.
I'm not one to be dishonest about the consequences of what mp3.com is doing. Given that anti-intellectual property (IP) people are so quick to break fairly sophisticated encryption schemes to further their own philosophies (see the recent debate over the breaking of the DVD Content Scrambling System (CSS) encryption scheme), even if mp3.com isn't doing anything that violates copyrights, the potential for the anti-IP people doing it is much greater with services like my.mp3.com. It's not hard to envision schemes where every user of my.mp3.com potentially has access to the entire database even without owning all the CDs.
With great freedom also comes great danger. But there's also great opportunity: suppose every one on this planet constantly went to mp3.com to listen to any song in their 45,000 album catalog---think of additional ways revenue can be generated for the artists. I'm on the side of greater freedom and opportunity for all, which mp3.com's new ideas offer in this Brave New Digital World.
I don't think there are any angels here. Given that mp3.com is a public-owned company, I think it's right to question their motives and future intent. The question to ask and answer to evaluate this is whether mp3.com's actions help music makers and music lovers gain more freedom. Ultimately my position is that mp3.com (and Napster, which is also being sued by the RIAA for somewhat different reasons) is enabling musicians and listeners in ways that were not possible before in terms of their freedom to create and listen to music. They're making possible "rights" to consumers that haven't existed before. And that's where the future of music is. Don't let the RIAA take it away so they continue to live in their monopolistic world.
The law is not adequately equipped to address the issue of what happens when the bottles disappear. I believe it is in the interests of the masses to have the freedom to be able to purchase a copy of music and "own" it in the digital world without ever having to deal with hard media. But any savvy digital world person knows, ownership in a traditional copyright sense is simply not possible when the wine is no longer protected by the bottles.