When will the music industry wise up about digital music?

Great Debates
21

My impression among the admittedly lousy sample of people I know who download a lot of music is that they spent about the same amount of money on music as they spent before–they just have more music to show for it.

I can’t say that this is the general trend, but my best evidence for such would be that music sales have not suffered dramatically in the era of rampant file sharing. Yes, they are not as strong as in recent years, but that can be explained by a number of other factors, such as the poor economy and the lack of any big mega-hit albums. File sharing probably has some part in this, but it certainly isn’t a large one.

I agree very much with Sam Stone above. Bands with strong fan bases will be able to benefit greatly from the internet. Phish, for instance, is now making all its upcoming live shows avaialble on its web site for $9.95/show in MP3 format and $12.95/show in SHN. Bands like these will continue to benefit from fans who enjoy supporting their work, and will continue to grow via word of mouth, even if others are enjoying the music for free.

Bands who need exposure also stand to benefit. I have recently been turned on to the Flaming Lips, whose Yoshimi Battles the Pink Robots I downloaded and loved. As a result, I bought that disc, The Soft Bulletin, and if they play within a 3-hour radius of me, I’ll be there. Even if only one out of twenty people who downloaded Yoshimi responded that way, they come out way ahead, when you consider that few if any of those twenty would have bought the album otherwise.

The big record companies will eventually get on the trolley with downloading, but I suspect their first mistake will be to charge too much. They want to be able to make just as much money as they would have in their traditional model, so they’ll try to gouge for hit singles and still charge enough that someone will have to pay $14 for a full album. I think Phish’s price of $12.95 for three CDs’ worth of music is a good price, and I’ll pay it rather than going to the trouble of downloading the music. If the prices are too steep, people will flock right back to the file sharing programs.

The model that I suspect would be the best–based on my above assertion that people are not spending much less on music, but are getting more–is a subscription service. I would pay a large monthly fee for a practically unlimited service like Napster or its current brethren. If you’re going to spend $50/month on music, then the industry as a whole makes the same amount of money if you buy a single CD for that or if you get possession of every single note recorded anywhere that month. A subscription service would allow payment to be made to the artists (in a manner similar to the current royalty systems) and would let the consumers keep that “unlimited” aspect that draws many to file sharing programs.

Sorry for the rambling–I have a lot to say on this subject.

Dr. J

22

I suppose it is difficult to agree on anything when we can’t even agree that copy right infringement is a form of theft. You didn’t even try to answer the other part of my post.

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If the copyright is less than 14 years old and the record companies make music available for download at a small fee would it still be ok to “share” files?

Marc

23

MGibson probably works for the RIAA, because I know of no one who is anti-file sharing. Pretty much everyone I know of has, or does use it. The sad fact of the matter is, the RIAA is being stupid about it. The public is showing the RIAA what it wants, and the RIAA is saying, no, let’s make it inconvienient to get the music you want. Let’s jack up the prices so that for 20 dollars, you get 1 maybe 2 good songs, the rest is crap. That’s the main reason for file sharing. If all the songs on a CD were good, people would buy the CD, because it takes a long time (occassionally) to download a full CD. Plus the quality is bad.

Shame that the RIAA hasn’t ever heard of a little principal, called popular sovereignty. Apparently, this term, says that the government is for the people, by the people. The RIAA can fight this in court, but if enough pressure is put on the RIAA by the public, the public will ultimately win. Period. All it takes is to boycott buying CD’s, and the RIAA will beg the public to buy CD’s from then. Unfortunately, by the time the RIAA comes back to buying CD’s, artists and fans alike will have discovered the usefulness of the internet to the fullest ability, and the RIAA will be royally screwed.
Making ISP’s accountable for their users actions will do nothing. It will just cause ISP’s to lose a large amount of their users, and new “rogue” ISP’s will start up. This is unrealistic, and any attempt at it is doomed to bring about the apocalypse on the RIAA and the ISP world.

Attempting to encode CD’s so that users can’t burn them will only be good to such a point. There are already programs that defeat the most advanced copy protection devices. This is another fruitless endeavor for the RIAA. Incorporating such technology into Microsoft, will lead to a mass migration to Linux or (God forbid) Macs… (I knew the apocalypse was coming)

Bottom line, RIAA will be gone in 20 years.

24

It still wouldn’t be legal.

Are you asking for a moral judgment? I thought this thread was about the practical issues surrounding the industry’s treatment of digital music. Whether file sharing is “OK” or “wrong” is irrelevant to the industry’s response to file sharing–their interests will be served much better by making a better product than by trying to convince people that they’re thieves.

Study: Napster users buy more music

25

**

I’m against it though I will admit it doesn’t top my list of bad things to do. It isn’t like I’m losing sleep over it. I suppose since I’m also against software piracy that I must work for a software company of some sort.

**

I’ve done it as well during the heyday of Napster. During that time I came to the conlusion that what I was doing was wrong so I stopped and deleted all the files I had downloaded. Not the worst thing I could possibly do but it still wasn’t right.

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 I agree that they're being stupid and will eventually have to change.

**

Didn’t people use that same arguement to justify software piracy? Or how about bootleg movies? No matter I suppose. I don’t know what kind of CDs you’re buying. I can only think of one CD I bought that only contained 1 or 2 songs that I liked.

**

How many CDs do you purchase that only has one or two songs you like?

**

If CDs suck so much I wonder why people continue to buy them. Any ideas?

**

I agree, the ISP really can’t go through all their customers to make sure they aren’t doing something illegal.

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I seriously doubt it will spur a mass migration to Linux. Linux is a great OS but it isn’t for the average computer user.

Only to have another entity take its place.

Marc

26

**

When it is referred to as file “sharing” someone is making a moral judgement. Why question me for making the same judgement?

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I disagree as I think it is very relevant. If you think that file “sharing” is right as rain then nothing the RIAA does is going to be ok with you.

Based on a survey of 2,200 people. I’m not convinced though I’m not convinced that it hurt the music companies all that much either.

Marc

27

…so somebody disagree’s with you, their working for the RIAA? I find your accusation insulting.

and this justifies the situation how?

…what ** does** the public want?

cite that only 1 or 2 song’s on a CD are good? I don’t own one CD where I don’t like the majority of songs on it-name one artist who states that he creates sub standard work just to fill up space on a CD.

I’ve never heard of this term before-but if we use your definition what does the government have to do with the RIAA?

…the public will ultimately win…what? What is the eventual goal here?

go on, boycott buying CD’s then. What result do you want?

Oh I see, you want to put the RIAA out of business? Is that the only goal?

Agreed.

So companies shouldn’t protect their products from theft?

Maybe, maybe not.

To those who say that the RIAA should adapt-what online business model do you propose they should adopt? And I am talking about business model here-not just some “do it over the net and not charge too much”-that doesn’t cut the mustard in the real world. WHAT should they do?

…how feasible is online purchasing? How many of the biggest spending demographic actually have credit cards? Access to Pen-Pal? When something on the net which was formerly free become’s pay only, websites typically experience 90% drop off.

http://news.com.com/2009-1023-874724.html?legacy=cnet

…so how would the online model of business survive, if, when forced to pay, people will just go to another P2P site?

…and, with your online model, happen’s to the retail stores and employees? The largest revenue take isn’t the greedy record exec’s-it goe’s to the retailer.

http://www.everything2.com/index.pl?node=record%20company

…what happens to the CD manufacturer, the marketing distributer, the artist, under the online model. Or don’t they matter? Goodness, sometimes this whole thing sounds like multi-level-marketing… "let’s just get rid of the middle man…
…and to those who keep coming up with excuses as to why copyright infrigement is acceptable, it does get tired reading the old excuses over and over again. The truth is, we download music because its FREE, and its EASY. We don’t do it because we want to get back at the RIAA, thats just an excuse. It’s not because CD’s are too expensive, because their not. It’s not because I like to try before I buy, because it’s not-and if I see that study with that flawed methodology again, then I will scream.

The fact is, it’s free, it’s easy, so we do it. I have no love of the RIAA, or do I hate it, it is a business that is doing it’s best to protect it’s interests, as any business should.

…so, how would this online way of doing business work?

28

**

Given the implications of widespread filesharing I would think that is something that the RIAA needs to figure out. Relying on people to simply “not steal” certainly will not work. Attempts to make songs uncopyable and impossible to distribute given today’s technology is a pipe dream as well. Songs are after all only sounds. And I certainly don’t want the government spying on my computer looking for illegal mp3s (or whatever variants of digital music that start popping up in order to evade detection).

It is possible to appreciate the moral issues involved in file sharing and yet still see that the course the RIAA is taking will not work.

29

These problems will start to impact the publishing and video industries more and more pretty soon as well. How our conception of Intellectual Property will eventually adapt to the advent of the Internet is anyone’s guess.

30

The problem is, the RIAA doesn’t have clean hands here. If someone uses the government to give them something that doesn’t belong to them, is it unethical to use technology to get it back?

The whole concept of artist’s copyrights is screwed. The idea is supposed to be that people get copyright to give them control over their intellectual property and allow them to profit from it for a reasonable length of time. Then these things are supposed to become part of the culture for all of us to enjoy.

If the RIAA had been around in Beethoven’s day, all his works would still be copywritten and our culture would be much weaker.

Copyright law was never intended to give some organizations a perpetual monopoly on the culture. That’s not the way intellectual progress is supposed to happen. And the only reason it’s happening this way now is because the entertainment industry is THE biggest contributor to political campaigns.

As bad as the laws are now, you should see the doozies the RIAA and other entertainment lobbyists tried to get through. If they had their way, our PC’s would be totally controlled by them. They still may get their way, too, because these failed bills keep getting introduced.

And sometimes, some really bad bills get past some governments. For example, did you know that there is a tariff on blank CD’s in Canada, and so far the record industry has collected 28 million dollars from it? And guess how much has gone to the artists? Zero. Not content with this, though, the record industry is not pushing for insanely high tariffs in Canada.

Another problem with the record industry is their shady accounting.

Let’s look at this list of CD costs:

[quote]

Manufacturer’s Costs:
Recording expense: $.065
Manufacturing expense: $1.25
Packaging: $1.30

[quote]

So far, so good. Those look like reasonable figures. But then we have:

A lot of this is music company fancy bookkeeping. And only the biggest bands get this kind of promotion. Usually, ‘promotion’ means touring, and the record labels advance this money against royalties.

Most artists who sell less than 100,000 copies or so (the vast majority) never see a nickel of this, because the money is used to pay for ‘expenses’ the record company has. Often, these expenses are on paper only. For example, paying a production house to produce the CD’s is listed as an expense against royalties, but the production house might be owned by the record company, so its ‘profit’ is just a way of hiding money from the artists.

Payments they never made. They left thousands of musicians without a pension because they fraudulently claimed to be paying this money, and never did. They were sued, and have settled for a lesser amount.

So the manufacturer and distributor make three times what the artists are supposed to make. Except that often the artists don’t get paid. There have been a number of lawsuits lately from artists who are questioning the bookkeeping of the record industry because they have received so little in royalties.

Also, these numbers are for ‘first run’ printings. But these albums stay in stores for decades, long after the artwork, advertising, mastering, and other one-time costs have been amortized away. Hit songs get packaged and re-packaged. And the record companies are keeping most of that profit for themselves. For example, a few years ago a copy-editor in Congress modified a bill AFTER it was voted on, stripping copyright away from artists by converting their rights into ‘performance’ rights. That copy-editor went on to be an extremely high paid lobbyist for the record industry, surprisingly enough. That highly unethical little transaction was undone a few years later, but not until the record industry pocketed several hundred million dollars in royalties that did not belong to them.

In the end, making unauthorized copies of copywritten works is certainly illegal. But it shouldn’t be. File sharing should be treated like radio - we get to listen to songs for free, and in return the record companies get exposure for their goods.

I think the record companies actually know that they aren’t really losing money to file sharing. I mean, record sales are down 10% in a weak economy, with growing competition for entertainment (satellite radio, digital radio on cable, DVDs, etc). And the industry will even admit they have talent problems. They had to pay 28 million to buy out Mariah Carey. Madonna isn’t selling. Britney isn’t selling. Christina isn’t selling. And you know what? The demographic group of these acts do not generally share music.

On the other hand, bands like Wilco, Coldplay, Eminem, Ja Rule, and others are having record-setting years, and they fit smack into the middle of the young male file sharing demographic. Hell, Wilco gave their album away for free on their web site for almost a year before it was released, and it debuted at #13 on the charts, when their next best album was something like 90th.

Given all the problems with the economy and the music biz, I’m surprised they haven’t lost more than 10% market share. Disney is down 19%, and you can’t blame file sharing on that.

I think the record companies know this. But they also know that they are becoming the equivalent of blacksmiths after the invention of the motorcar - their product just isn’t necessary any more. Or at least, it won’t be in another ten years or so if the market is left to evolve on its own. So they are doing what any well-connected industry does when times get tough - they are using the government to erect laws to protect them, at the expense of the consumer.

31

Great post Sam Stone, great post.

If I may reiterate… as I said near the top… the 4 main ingredients are as follows…

(1) Creativity and Artistry

(2) Recording and Mastering

(3) Marketing and Awareness

(4) Distribution

We now have a situation where Points (1) and (2) are easily funded by the artists themselves. As are their “exposure” websites.

We also now have a situation where artists can cut deals with one, or multiple printing houses to have the entire professional pressing and printing of their album (with extra features and gorgeous graphics and liner notes etc) produced by those printing houses for immediate sale and distriution anywhere in the Western World if truth be known.

Hence, the area of “Marketing and Awareness” is the one area I don’t wanna pontificate on - there are some pretty cozy arrangements that the Radio networks like Clear Channel have with the RIAA at the moment - however, Clear Channel is the one ACCEPTING the money - which means they’re obviously open to any bidders.

As for the final piece in the jigsaw puzzle regarding distribution? Well guys, it’s my opinion one of you American’s are in the right place to “get in on the ground floor” at the moment.

You see, one of the arguements “Record Stores” use for justifying their continued dealings with major labels is ease of use in re-ordering stock. Within reason, it’s a bit like one-stop shopping.

THe opportunity exists now for a very smart businessman to start acting as an “alternative” conduit between all the “record stores” and all the “printing houses” and all “the artists”. Such a businessman will, in effect serve the same function as a current “rep” does for an existing “major label”.

That’s where the next revolution will take place I predict.

Gee, I better start up a business in the US pronto!

32

I guess you don’t know any professional musicians.

33

Professional musicians like Janis Ian, Wilco, Phish, Courtney Love, or Beck?

All of them have supported file sharing, using the kinds of arguments I used above (i.e. the artists aren’t hurt by file sharing, because the record companies manage to keep most of the profits from album sales anyway. They make their money from direct sales of merchandise and touring, both of which are helped by file sharing).

34

Small sample sizes don’t necessarily invalidate a survey. Many electoral surveys use even smaller samples than that, and are reasonably accurate.

So, tell me, if Napster is illegal, why isn’t Xerox?

Xerox makes duplicates of copyrighted work. Napster makes duplicates of copyrighted work. Xerox photocopiers make duplicates of copyrighted work. So why was it up to Napster to prevent others from abusing copyright, but it’s up to the user of the photocopier not to break the law when using a photocopier?

35

And HUNDREDS of others have not. Why is Courtney Love’s opinion relevant to Anthony Keidis’s property? (To use one example of a musician I know has expressed a dislike for file sharing.) If I thought it was okay for people to steal my car, does that give them a right to steal your car, Sam?

Or let’s extend this to books. Suppose you and I are published authors, and I say it’s okay for people to copy my books and reproduce bootleg versions, irrespective of copyright. Does that mean my opinion extend to your books as well?

Understand, I’m not saying the music industry doesn’t have to start taking the new technology into account or that I agree with the RIAA. But let’s not live in some fantasy world where the musicians all think file sharing is great; a majority of them don’t think anything of the sort, and quoting a few exceptions does not have any moral or ethical weight over the wishes of those who don’t want their work copied for free. One person is not entitled to authorize the public sharing of another person’s property.

I agree that the RIAA’s obsession with file sharing is luddite bullshit, but there’s still a legitimate concern on the part of many musicians.

36

One fact that complicates matters… CDs are probably headed towards obsolescence. I recently got an IPOD MP3 player… it holds 20 GB of data…the equivalent of over 300 CDs encoded at 128 KBS. Many home and car sound systems are MP3 compatible.

It’s a quite a chore to rip your CD collection and encode to MP3 format, but once done it will definitely change the way you listen to music.

Eventually a tangible “thing” to play music (CD) will be irrelevant. They scratch, skip, have to be changed, difficult to index, etc. Something that the RIAA and major record labels would prefer not to even think about.

I would say the online downloading dilemma is more similar to the emergence of radio in the early 20th century which eliminated the need for sheet music and instruments as the only means to hear music.

37

Down with obsolete parasitic monopolies!

Seriously, I’m gonna cry myself to sleep just because some rapper, some rock star or some record exec can’t become unreasonably wealthy anymore. Boo frickin hoo.

Ominous clouds are on the horizon however…