Given that file sharing is not going away what does the music industry do?

Great Debates
#1

How do you make a buck in the new millennium where file sharing may be illegal but is also ubiquitous. What are the real world options for the music industry? Are the gravy days over for the big acts?
Do you tour more and do more live shows?

Implement more diabolical copy protection schemes?

Legislate stricter penalities?

Change the structure of the net itself to prevent file sharing?

Accept that digital file sharing is here to stay and try to compete with a better (however defined) product?

What do you do to keep that multi-media conglomerate stock price up?

#2

Foist off, copy protection won’t work, for the simple reason that computers can record sound directly to a .WAV, and convert it to MP3, with a minimum of effort. Penalties mean nothing: <click> “What music, officer?”
The net’s here to stay. Basically, a medium through which child pornography and bomb recipes pass without a trace could swallow almost any informational industry with nary a burp. The real question is what happens to movies when broadband widens a little?

#3

Evolve?

#4

Adapt. VHS didn’t kill the movie industry. Neither did Blockbuster. Cassette tapes didn’t destroy the record business, and neither did Minidisc or the recordable CD. And in all of these cases, the various industries went ballistic and tried to stop the technology. And in every case, their profits went UP after they gave up the fight and worked with the technologies instead of against them.

If you ask me, the record industry should embrace the new technology, and work with it. Copy protection is a non-starter - the only way you can do it is to force every manufacturer to put a copy protection chip inside every piece of equipment that can store digital information (there’s a bill in congress right now that seeks to do just that - if your congresscritter supports it, let him know how insanely bad this idea is).

If I were a record exec, I’d be thinking about installing kiosks in record stores that allow people to choose songs like a jukebox and then burn them on a CD for ten bucks. I’d open an online store to sell MP3’s for a dollar each. I’d lower the price of CD’s to the point where it doesn’t make sense for the average person to go to the hassle of burning one. I don’t know what that price is, but I suspect that at $9.99 or $6.99, CD’s would fly off the shelf.

I’d do what the DVD makers have done - put out a basic album at a low price, then put out the ‘special edition’ album a few months later, recorded at very high resolution in DVD-Audio or SACD or both, with a couple of music videos on it, and some GIFs of cover art. And maybe even some special features like a ‘mix your own’ feature that has the raw tracks and allows you to mix them yourself. Photos of the band, movies of the recording session, etc. Sell THAT for the price of a DVD. And it would be much harder to copy that and distribute it over the internet, because there would be Gigabytes of data.

Be creative. You can’t keep pandora’s box closed forever, so you’d better learn to work inside it.

#5

You know, the contention that file sharing has cost the music industry anything at all is not supported by the evidence of any statistical comparison of the amount of file sharing being done, and the income of the record industry.

I know of more people who have bought CD’s because they heard shared files, than people who decided not to buy CD’s because the shared files were available. The statistics show that sales were up during the period that Napster was most active. The files I have on my computer are all there because the industry doesn’t have Lightnin’ Hopkins CD’s in the stores, and you can’t even buy an Ambrose Thibedeau CD anywhere. Don’t tell me I am cheating Hutty Ledbetter out of his copyright when I download that. Lee Michaels? Leo Kotke? Forget it.

What should the recording industry do? Celebrate. Chill. Start producing higher quality CD cover art. Start providing well indexed databases with subscription user accounts so I can order my CD’s on line, and get a download to RW disc, with sleeve cover art, in a single software package that uses my disk, and paper on my recorder, and printer. Dare I say it? Move into the twenty-first century.

Tris

“You could park a car in the shadow of his ass.” ~ Geena Davis, in Thelma and Louise ~

#6

I’ve never really figured out what is so important about maintaining the status quo. The recording industry, by anyone’s standards, is one big ball of sleaze that pisses off everyone- artists, consumers- everyone but the stockholders. As digital recording/mastering becomes easier and cheaper, and lanes of distribution get free-er and wider, the role of the industry is fading, the recording industry will hopefully go down even without file sharing.

With any luck, the record industry will be replaced by something that is more beneficial to artists and consumers. I don’t see why we are rushing around modifying laws, ingnore anti-monopolistic regulations and taking massive governemental steps towards protecting an industry that serves nobody’s needs. I say we stop these governement life support methods and let it die.

#7

All the functions the big music companies provide now are obsolete or will soon be obsolete.

  1. Distribution: Clearly, P2P has been shown to be far superior than stamping out discs and selling them in stores.

  2. Recording: The facilities provided by the music companies can also be replaced by cheaper PC technology. Small recording studios can soon be made with MUCH cheaper equipment and much lower costs.

  3. Filtering: As in filtering out talentless music acts (than can’t make money). Currently, they provide the useful service of keeping the musical choices down to a managable quantity. I think other filtering mechanisms will arise, probably the media.

Perhaps the question now is “how will the musicians make money?” CD sales, but from new music stores and kiosks that makes CD’s cheaply from downloaded sources, and kick back a small portion to the artists. Also, from live performances, web ads on web pages that distribute their music, revenue from their music being used on TV, moves, video games, etc.

#8

(Warning: rambling.)

The music industry still controls its most important asset–the avenues by which people hear music in the first place. If file-sharing were 100% legal and all songs were readily and freely available, my bet is that the most popularly downloaded songs would closely mirror those most commonly played on the radio, VH-1, MTV (do they still play videos on occasion?), etc.

My guess is that the industry will take bigger steps into advertising. They’ll still market Britney Spears like they always did, but the album will have a huge Pepsi logo on the front. You could download it from their web site, which will have a few Pepsi pop-ups. I think it’s a matter of time before the world of commercial jingles and commercial radio merge completely, and we find things like Britney’s Pepsi jingle being played as a single. (Record companies pretty much already pay radio stations to play their singles, elaborately working around payola. Why couldn’t Pepsi do the same thing?)

Artists with more integrity/less marketing appeal will flee to smaller labels, depending on word-of-mouth to build popularity and on live shows for the bulk of their income–pretty much like now. I can’t see someone like Lucinda Williams doing anything but benefitting from ubiquitous file-sharing.

Meanwhile, CD prices will absolutely have to drop. I know it isn’t as easy as most people think it is (“It only costs a nickel to print a CD! Why can’t they sell it to me for a dime?”), but I think getting the average sale price around $9-10 is both possible and necessary. Again, I expect that the labels will make up the difference through advertising; Britney’s No, Seriously, I Was A Virgin Once will be available for $7.99, but will have a huge Pepsi logo incorporated into the cover art.

Dr. J

#9

Musicians could simply put up web sites saying “Give me money” with all their music downloadable. Or possibly a similar sell a music song for a dollar. Considering how little they get from cd sales it would probably be much easier for them to make money that way.

#10

Excellent comments, all. It’s true that the music industry is a bit of a dinosaur, but it’s a HUGE dinosaur. It’s got tentacles into the radio business, movies, tv, distribution through thousands of stores, etc. There are billions of dollars at stake.

It’s not going to go down without a fight, and given the number of politicians in its back pocket, the government is guaranteed to be a big part of that fight.

Record companies still performa valuable services to artists, too. Aside from producing and distributing their CD’s (which I agree could be done today just as well or better by small independent labels or even basement studios), they also front money to artists to pay for concert tours, they arrange and promote the tours, they arrange for promotional appearances for artists on TV shows, they act as sales agents, selling the artists materials to companies for commercial jingles, to movies, etc.

But none of this needs a huge corporation any more. If this industry is allowed to evolve, I can see many of these roles taken over by small artist management firms and musical agents. Think about the way actors work with Hollywood today, as opposed to the old contract system. In the old contract system, an actor would become a contract employee of a large movie studio, which acted much like record companies do today. And the actors generally got screwed over in the process.

Now, actors work for themselves, and hire agents to manage all of their stuff. It’s a better system all around.

So instead of an artist signing with a record label and agreeing to create X albums for them, artists could create a demo tape in their basement studio, send it to an agent, and the agent could shop it to independent production facilities for a percentage of royalties, and then with a distribution house for the CD. Or, the artist could try to forego professional production with his own studio, much like some actors produce their own movies to cut out the middle man.

Can you imagine the innovation that would occur under this system? Without being locked to a record company, artists would be far more free to experiment and take chances. With multiple distribution outlets available, artists could put smaller, experimental works out on MP3 at very low cost, and save their premium or mass market work for CD production. There would be innovation in packaging, distribution, marketing, you name it. It would be very healthy for the music consumer.

And the large labels could even survive and even prosper under such a system, just like the big movie studios survived even after they lost all their contract actors. Adapt, find a way to leverage your strengths, etc.

#11

Why, why oh why won’t record companies sell MP3s? If they think the MP3s will devalue current albums (I don’t think they will, but the record companies seem to suffer from inherent paranioa) then they can sell their backlists.

An easily searchable database. A per download or subscription fee. I’d be in heaven if I could find The Impressions or Ruth Brown. The Flower Duet-- I’d pay to have that on my hard drive.
Music business insiders, you know how the industry works. Why can’t this be done?

#12

It CAN be done. But the industry is convinced that putting its copywritten material out in an unprotected file format would be their death. That’s why they are fighting for the new bill in Congress introduced by Fritz Hollings, which would require encryption devices in every digital device. Then the record companies could put their material out in encrypted form, and computers would not be able to make copies of it.

Of course, this is an insanely bad idea, and totally unworkable anyway. But that hasn’t stopped them before…

Here’s a little rant I wrote a while ago on this subject: http://happyfunpundit.blogspot.com/?/2002_02_24_happyfunpundit_archive.html#10282500

#13

[aside]Sam, I never made the connection between your old screen name and the postings at Happy Fun Pundit, although I should have. I read HFP along with Instapundit, LGF and Jane Galt just about every day. Nice work, there.[/aside]

#14

Well…I think that these music corporations are going to try to legislate themselves a death row reprieve. But, ultimately…technological progress will roll over them. They are obsolete & need to deal with that.

Lowering CD prices are a band-aid at most. Because CDs will be obsolete soon. Selling MP3 is a dead end when user will be able to download tracks for free on Peer-to-Peer networks. They can try copy-protection all they want. But techies will find a way around them in an instant.

The new reality will be that music will be freely available. Period. Deal with it. How will the corporations make mega-bucks in light of this? They won’t. They will die off like the dinosaurs they are.

The artists themselves will have to adjust to this new reality. They will no longer make money from selling their music to consumers. But don’t worry…there will still be ways for them to prosper. They can make money from live shows still. And there is no doubt in my mind that they will be find ways to provide things of value to their fans. Special “behind-the-scenes” web shows… Pay-per-view concerts, all kinds of merchandise, etc.

Perhaps they won’t become instant millionaires like the pop stars of today…but that might be a good thing as far as music is concerned. This will filter out those manufactured bands, leaving only those who are more concerned with making music–not money.

It seems as though everyone is trying to impose the old business models on this new reality. Things change. It isn’t the end of music. If radio were a new invention today, these same record companies would be in a panic over people “stealing” songs by being able to listen to them without buying them. Well, now people will have that same freedom to listen to the music of their choice without having to purchase it. Artists will have to adjust to giving their songs away for free. They’ll have to look at it as a way of promoting their revenue-producing projects.

#15

One thing that all of you seem to be convieniently overlooking is the fact that ma good part of the music buying public doesn’t have regular access to a computer where they can download music files, burn CD’s etc. Plus, it costs a lot more to go thru the whole deal of buying a cvomputer etc, then it does to go out and buy a very good stereo system and a good number of CD’s.

Oh, one more thing, CD’s DO NOT cost a dime to make. If you include all of the packaging, they cost about a dollar. And try and keep in mind that of the $15-18 that you pay for the CD, it all gets spread around so that it pays the salaries for EVERYONE at the record company including the cleaning people, who, if the record companies went bankrupt, as y’all seem to be joyously wishing and hoping for, would be out on the street jobless.

Think about THAT as you download your latest music files.

#16

pldennison: Thanks! It’s nice to hear that people like it. We have about 1000 unique visitors a day right now, so lots of people are reading it, but unlike message boards you can write stuff and never get any feedback as to whether or not it’s any good. I’m glad that people I respect like you are enjoying it.

Mr. Frink: Well… Yes and no. You are thinking like a techie. For you, downloading MP3’s is trivially easy. For most people it’s not. The vast majority of computer users have never downloaded an MP3 in their lives. And for many people, the hassle involved in connecting to a P2P network, finding the songs they want, downloading them, and burning them onto CD is just too much hassle. If the price of CD’s were lower, they’d happily just buy them and pay the premium.

Plus, Mp3 quality sucks. It really does. It’s fine to listen to on your computer, or in your portable player while you’re jogging, but try listening to them on a good home stereo - I have, and the difference between a 128kbps Mp3 and the CD original is startling. I even notice it in my car. I just bought a new Warren Zevon CD (“My Ride’s here” - highly recommended), and I burned a copy of it to listen to in my car. The difference in quality between it and the original is quite noticeable.

Audio quality is one advantage CD’s still have, and if the industry were smart they’d play that up and increase it by moving more content to DVD-A, which is even better and therefore much harder to download.

#17

Silly rabbit, nobody who cares about music fidelity rips tracks at 128 bps. :stuck_out_tongue: Even a non-audiophile like me rips at 160 minimum; I imagine a true music junkie wouldn’t be satisfied with anything less than 256.

And what the music industry should do is adapt; what they want to do, instead, is legislate. Silly, silly, silly…

#18

SamI agree whith everyhting you have said in this thread, but in particular I think you are right on the price issue, and also with what you said about the quality issue. I have just about 0 intrest in MP3, becasue I find the quality too low to actually listen to on my stereo. I do, however, buy many CDs. I try to buy used because the price of the new stuff is too high. I would guess I spend $150-200/ month on CDs, but most of that is at used stores. I refuse to pay $15+ for a CD. However, if CDs were $6-7 new I would probably buy more from new CD stores because often I cannot find what I am looking for on the used market.

On the other hand, I also still buy alot of vinyl so maye I am just weird. :smiley:

#19

rjung: The standard for internet distribution of MP3’s is 128kbps. If you use a P2P application that shows bitrate, select a large bunch of MP3’s and have a look at them. 95% of everything you’ll find online is 128kbps.

Not only that, but most MP3’s that you find online are burned by Teenagers who think that it’s the height of coolness to crank the bass and treble up to the maximum before burning them. That, or they leave their sound card’s ‘effects’ loop in place, so that the music has a lot of modifications. Most of it is really bad.

I used to download MP3’s of albums that I already had in my collection, because it was easier to get them in that format by downloading them than it was to take my CD’s and rip them myself. But I gave up when I found out how crappy most of them were. Now I have to rip my own CD’s (and you’re right - when I rip my own, I use a much higher bitrate. 128bps sounds like crap on a decent stereo).

#20

WSLer: Whoa. I don’t see anyone here arguing in support of music piracy. I certainly don’t support it. In fact, on the website I linked to above I just recommended a CD that you can find online if you want, but I explicitly told people to go out and buy it.

But you have to recognize that the music industry does not have clean hands in this regard. Even a libertarian-leaning person like me can disagree with that industry, because they don’t fight fair. Specifically, they spend a lot of money and effort buying politicians and getting legislation passed that benefits them.

For example, a couple of years ago their lawyers slipped a midnight rider into a farm appropriations bill which deprived artists of their performance rights. It was done this way so that there would be no debate on the issue and lawyers representing artists wouldn’t have a chance to mount a counter-offensive against the bill. That was sleazy, and it’s typical of the way they operate.

Another example is the current bill in congress, which was sponsored by Fritz Hollings. If it passes, every electronic device that can store digital data will be required to have an encryption chip in it, and it will be illegal to decode digital data back to analog in any device other than the output device.

The new Celine Dion CD is copy-protected. This is not mentioned anywhere on the CD package. If you buy this CD and put it in your iMac, you’re in trouble. Because the way they ‘protected’ the CD is to make it lock up any computer that tries to read it. On a PC, you can eject it. But on a Mac, I don’t believe you can. I’m not sure what you’d do in that case, but the record company has already issued a disclaimer (likely invalid) saying that they assume no responsibility for damage.

Not only that, but these copy-protection schemes will deprive consumers of their fair-use rights under the law. You won’t be able to burn a copy of your CD onto Mp3 to play in your walkman. You won’t be able to play the CD on your computer. You won’t be able to make an archival copy, or make a copy for your home jukebox (I have an MP3 jukebox for background music in the house, and all copy-protected CD’s are now useless for that).

The list goes on. The entertainment industry has greased congress so well that they managed to pass a whole bunch of laws which are going to damage all of us, they’ve managed to get copyright extensions on older works (in violation of the spirit of copyright laws), etc.