Part One - Part Two - Part Three - Part Four
3: There is always an easy solution to every problem — neat, plausible and wrong
I'm going to depart from the meat of U2's manager's speech for a bit to get into the alternatives to the assumptions that are the basis of Mr. McGuinness' assertions: that the music business has been ruined by illegal file sharing.
One part of this is the question of just how badly the industry is doing - indeed whether they are doing badly at all. Although it references only one player in the Australian industry, this opinion piece suggested that industry’s gloomy pronouncements were hiding all-time high sales. While they may bemoan the state of the industry when discussing the impact of file sharing, when discussing their position as publicly traded companies the picture that’s painted tends to be more optimistic. All this can be confusing stuff. There are sales, and then again there are revenues, and then again there are profits. And what the hell is a “margin”?
In general though, since I’m no economist I have to go by the trends in reporting and it seems pretty clear that there is a consensus that the business of selling mainstream CDs is in trouble, revenues have tumbled sharply over the last decade, many retail stores dedicated solely or primarily to music have gone out of business, and the stocks of the publicly traded companies have taken major hits. You’d be hard pressed to find an analysis that suggest that the record business as a whole is doing anything but worse. And while projections are just that, they suggest that the decline will continue and that to the degree digital downloads counter declining CD sales, they won't completely make up for these declines.
Far more uncertain is a core argument at the center of McGuinness’ speech: that the blame, or at least the majority of the blame, for these declining fortunes can be laid at the feet of illegal file sharing. Certainly for an industry insider to hold this position is not surprising. It has been pushed hard by industry representative groups like the RIAA and the IFPI. You can find plenty of research that supports the position (of course, you have to consider the source: SafeMedia is selling technology that purports to remove illicit copyrighted materials from P2P traffic. Nevertheless, many of the cited articles are legitimately argued by relatively unbiased sources). Personally, I think that an important and largely undiscussed element in the prevalence of this argument is that it is driven by uncomplicated causal logic. Napster hit, file sharing became a phenomenon, record sales declined. Do the math, right?
I reviewed a fair amount of both primary research and media interpretations of the situation. My own unsatisfying conclusion is that I’m not equipped to make a particularly sophisticated judgment of the primary research, a situation that makes the scientist in me very leery of coming to conclusions that “happen” to support my personal biases. I think it is fair to say, however, that there is honest disagreement between the better-equipped and less biased researchers on the topic of the role and extent of of filesharing’s impact on the CD business. So I’m not going to argue my own specious conclusion on the subject. Instead, as food for thought I hope I can shine some light on just how complex and ambiguous the situation is.
That file sharing of unauthorized copies of copyrighted songs is occurring at a large scale isn’t a subject of dispute. The essential question - the one that is almost never addressed or indeed acknowledged by the record industry, is the degree to which file sharing is displacing sales. The logic contrary to the party line is simple: the fact that someone will download a song for free does not imply that they would necessarily purchase the song legally if it weren’t otherwise accessible. A trivial demonstration is that an individual could easily download free music worth, if it were purchased legally, far more than the individual has available to spend. Preventing the downloads couldn’t possibly generate the supposed revenue selling them would have generated: the money simply isn’t available.
There are a variety of different approaches to researching the attachment of music revenue losses to illegal file sharing. Data on overall file sharing volumes over time, specific files being shared, and demographics of individuals engaged in file sharing can be compared to similar data for revenue from conventional sales. Furthermore, individuals can be surveyed about their habits and beliefs about how their file sharing and music purchasing intersect.
The problems with this data are numerous. By its nature, illegal file sharing is not exhaustively or accurately tracked. Any specific data on file sharing statistics must involve a significant amount of assumption, and it is not much of a stretch to suggest that the bias of the observer will affect what sorts of assumptions are made (it is fair to point out that the issue of bias cuts both ways - plenty of biased analysis is made to argue that file sharing does not impact conventional music revenues).
Even going directly to the consumer for information provides uncertain conclusions. If individuals projected their own purchasing decisions with absolute accuracy no well-funded movie would ever bomb and no major product would ever fail. The decisions that people make with their wallets in actual consumer venues are notoriously difficult to predict. Frankly, a possible conclusion that merits greater attention is that the impact of file sharing on CD sales cannot be accurately determined.
If the case for a cause and effect relationship yields uncertain conclusions, is is only sensible to look for alternative explanations. In the case of declining music revenues there are many potential causes that have gone largely unexamined by the record industry.
The hardest to prove one way or another, while ironically the most important to correct if it is a serious factor, is the charge that the record industry basically screwed up its product. Critics point out that the major labels have progressively issued fewer new releases, in essence cutting variety and consumer choice. While essentially impossible to quantify, many have pointed to a fundamental decline in the quality of mainstream recorded music, as the age of the video favored image over substance. An interesting corollary to the quality argument is the issue of independently produced music. It is possible that the declines in major label CD sales are being displaced to a greater degree than is commonly recognized by independent music sales. Arguing an increased relevance of independent music meshes well with the Long Tail concept, which asserts that while the traditional media retail model of stock carrying costs and shelf space discourage catering to niche markets, online retail and particularly the sale of digital information via download thrives on them - virtual shelf space is infinite, and carrying “stock” of digital information is virtually costless.
Whether from truly independent self-publishers or independent labels ranging from basement startups to major-minors like Matador and Sub Pop, the true numbers on independent music can be hard to pin down, since not all are tracked by SoundScan, the major music industry data tracker run by Nielsen (of television ratings fame). Even lacking concrete numbers, it can’t be discounted that independent champions like CD Baby and eMusic have quietly risen into the top tiers of online sales of CDs as well as digital downloads. Indeed, there could be no clearer testimony to the increasing importance of this market than the fact that SoundScan is tracking more of these markets - CD Baby recently arranged for artists to have the ability to have their sales tracked, while SoundScan started tracking eMusic’s downloads in 2006, three years after they started tracking legal downloads at all. As the data on these alternative sources of music come together we might seem some very interesting and different presentations of the state of the music business. Already certain aspects of the independent markets are suggestive: eMusic, for example, places the median age of its users in the upper thirties, an underrepresented demographic in mainstream music, and gains more revenue from full album downloads than from singles.
The state of the single is a topic in itself. The CD single experienced some of the earliest and most precipitous drops in sales, and was one of the first and least contested areas where blame was placed at the feet of file sharing. But it isn’t quite so clear cut, since at the same time the industry itself attracted blame for hindering the singles market for its own purposes - namely, because it would prefer to sell more expensive full albums, regardless of whether listeners want the rest of the songs on them or not. So you could argue that the record industry actually drove file sharing trends by restricting access to legitimate singles. The fact that the largest mainstream market in legitimate digital downloads, iTunes, is driven by singles rather than albums purchases supports a common quality argument about mainstream music: that the record industry is frequently selling albums with a few hits padded by filler. And while legal digital downloads may be picking up some of the slack of declining CD sales, the fact that the digital marketplace has made virtually every song available as a single would certainly be consistent with the failure of digital download sales to make up declining CD revenues. People may be literally buying less music because they never wanted all the songs they were compelled to buy for anything that was only available as a full CD in the first place.
Another argument is that the driving force behind declining record sales is that they are being displaced by other media purchases - primarily DVDs and video games. While proving it gets into very similar kinds of complexities as equating file sharing with lost CD revenue, it is a straightforward fact that DVD and gaming revenues have been climbing. If we can assume that consumer entertainment spending has been relatively flat (an assertion I haven’t yet found a good citation for) then it is certainly consistent that declining CD sales would necessarily follow. This is an interesting argument because it again raises the question of whether it would make any difference if file sharing could be prevented. If the money isn’t available it isn’t available, and arguably the cash-strapped file sharer would simply eschew recorded music in favor of their preferred media and seek access to free music through other avenues: in this context it might be considered constructive that the top feature consumers would like in an MP3 player is an FM radio receiver - and that this desire is stronger in the 12-24 age group than it is for those 25 and over. The fact may be that, no matter how much an anathema to the record industry, people - and especially kids - may consider “free” music to be a simple necessity for their entertainment budget - and one that they will find, one way or another.
What’s interesting, and important, about these alternative causes of major label sales declines are that for the most part they suggest realistic solutions - and that these solutions uniformly have to do with acknowledging consumer expectations and desires and responding to them by offering consumers more variety, more options and better values.
But in the next installment we’ll be returning to the alternate universe inhabited by U2’s Mr. McGuinness and take another look at the solutions he’s pinning his hopes on. You’ll find they sum up quite a bit differently. And then hopefully to soon wrap this up with a little coda about whither the Record Industry, and whether I care, and then back to reviews, hurrah!
It’s important that I acknowledge the intelligent input I received from this question I asked in Ask Metafilter - a great resource (and Metafilter has a neat area for members to post their musical creations also - well worth the $5 membership fee).
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
Review and commentary on life on the wire
All writings © Jonathan Mark Hamlow 2005 - 2012
Thursday, February 28, 2008
Thursday, February 14, 2008
Sympathy for the Devil: the plight of the record industry, Part 2
Part One - Part Two - Part Three - Part Four
2: Thieves, Burglars and Pirates
Before I get into analyzing U2’s manager’s version of the “what went wrong with the record industry” party line, let me clarify some personal stances. I’m not a proponent of file sharing as a method of mass transgression of copyrights. I never used Napster. I’ve never used KaZaA, eMule, Limewire, BitTorrent or any of the many other file sharing networks or applications to access copyrighted content, and I’ve never held an account for any of the networks that require one. I am a proponent of strong and durable copyrights (though not of the duration Disney recently purchased from Congress), I believe in paying copyright owners for their intellectual property (though I am happiest when most of the money goes to the actual creator). To this extent I’d guess I’m substantially in agreement with U2’s Mr. McGuinness.
On the other hand, like the majority of people I have a history of copyright transgression. A clear memory of my history with recorded music is buying a box of Radio Shack 90 minute tapes and recording a couple dozen records from my family’s LP collection the summer before my freshman year of college. I’ve made and received my share of mix tapes (and these days, CDs). I’ve gotten a few copies of CDs burned by friends, although it’s something I don’t ask for and don’t encourage. I’ve downloaded a few oddments that are technically infringing though not copies of commercially available materials, like Danger Mouse’s Grey Album remix, and I’ve downloaded a few (literally, a few) things, via various unorthodox tools, that by my own standards I really should have purchased.
I’m not a saint or a purist about copyright. I’m a realist and occasional opportunist. I bring it up not to proselytize my position or justify my transgressions but to stress that while I’m about to disagree strenuously with most of what Mr. McGuinness has to say about problems in the record industry, my objections are not based on a moral disagreement of what and artist or even that less empathy-inviting organism, the copyright owner, deserves. What I object to is stupid ideas that won’t fix anything and which would cause harm disproportionate to the problem they purport to solve anyway.
Revisit with me a moment the purported motive of Mr. McGuinness’ speech:
What I’m trying do here today is identify a course of action that will benefit all: artists, labels, writers and publishers.
In the first part of this essay I invited examination of this sentiment for what might be missing from it. Of course, the omitted party is the listener, the consumer, the fan.
Is this an inadvertent slip or a rare piece of unvarnished honesty? Have things come to the point that the industry insider sees the listener, the sole and absolute foundation of every iota of their fortunes, as nothing except a problem to be controlled?
I’d argue that whether it is conscious or not, leaving the listener out of the benefits equation is no mistake. One thing that’s clear in this speech is that the party line position is obsessed with the idea of stealing. Mr. McGuinness invokes the idea of stealing (and related concepts like thievery, burglary, crime and of course piracy) sixteen times in this speech. This is critical for two reasons. The first is that it is indicative of how thoroughly the listener experience, listener desires and listener rights have been left out of the equation. Mr. McGuinness does not pay even the smallest lip service to the value consumer of recorded music, or to the solution of the industry’s woes as having anything to do with satisfying the consumer’s desires or expectations. The closest he comes to addressing the fan as anything other than a presumed thief is his argument that people are enjoying live concerts more than ever, as based on the “generally unresisted” trend towards increasing ticket costs.
The second thing this identification of listener as thief illustrates is that it has become fundamentally unquestioned dogma within the record industry that the decline of major-label CD sales has been caused exclusively by illegal file sharing. There is not a hint of alternative or complimentary causes for the declining fortunes of the CD in this speech. And indeed this sentiment has been largely picked up and echoed by most mainstream media coverage. For the most part, the only thing that varies in this assessment are opinions on how the industry let the situation get so out of hand, and what can be done to rectify it now.
Leading the charge on the “what now” front is another commonplace component of the party line: the belief that there is, at least theoretically, a technical fix for the problem of file sharing. The speech invokes the SDMI as an example of what went wrong with the industry’s response to the problem of file sharing in the 90s. It is telling that the only culprit identified for the failure of this initiative is the US government’s “overzealous” protection of the public from “cartel-like behaviour.”
The latest take on DRM isn’t the only technical fix McGuinness proposes. A somewhat new facet of his thesis is the preposterous claim that ISPs could easily detect and disrupt file sharing traffic of unauthorized copies of copyrighted materials if they wished to do so. The examples McGuinness provides in the full speech reveal a depth of ignorance about what the internet is - indeed, what it means to “share files” - that is all too common in the record industry - and that might amuse if it was not the foundation of so much ill-founded and harmful ideas about changing government policy.
Which leads us to the third predictable leg on this tripod of industry-standard arguments. First, the dominant role of the consumer is intrinsically as a thief. Second, that the offending activity - file sharing - could be disrupted by a technical fix. And finally, that if the gatekeepers of this nefarious filesharing paradise, the ISPs, cannot be convinced to voluntarily deny the thieving consumer access to their stolen files via technological intervention, they should be compelled to do so by law.
These are all pretty much versions of arguments that the industry have been pushing for a decade - the relatively new component is the focus on ISPs and digital hardware manufacturers as the primary targets of ire and the perceived source of remedy.
It’s not really a surprising change in position. The industry’s only extant “solution” to the issue of file sharing - civil suits against individuals - have been an extravagant failure, and indeed statements made during the recently publicized first such suit to go to trial suggest that it has been a costly failure.
The shift of focus to players with deep pockets is inevitable. McGuinness takes what is coming to be a common tactic, to lay the blame of the situation at the anarchistic leanings of the silicon valley crowd - their “hippy values.” Of course, the same sort of pejorative assessment of communistic values has been slapped on anyone who has suggested that the increasing accessibility of information is an inevitable outcome of the information age, and that demanding that the technology makers and gatekeepers of the information infrastructure fundamentally alter their business to cater to the content crowd is rather the tail wagging the dog.
And really that part of it is just smoke, anyway, a bit of rhetorical flourish. The real meat of the argument is summed up in one question: “who’s got our money?” It is a sentiment that is mirrored in the idea that music industry “assets are exploited by the buyers” of MP3 players (the legal use of format-shifted tracks from legally owned CDs is ignored as usual), or the response to the existence of premium cost internet access for “heavy downloaders” with the rhetorical question “isn’t that our money?”
While it’s impossible to say for sure, I suspect that this line of reasoning will characterize the next act in this sad farce of the record industry’s decline. In the next chapter, I’ll examine these arguments about the causes and remedies of the record industry’s sad estate, and whether they’re likely to find much relief out of the pockets of Apple and Comcast.
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
2: Thieves, Burglars and Pirates
Before I get into analyzing U2’s manager’s version of the “what went wrong with the record industry” party line, let me clarify some personal stances. I’m not a proponent of file sharing as a method of mass transgression of copyrights. I never used Napster. I’ve never used KaZaA, eMule, Limewire, BitTorrent or any of the many other file sharing networks or applications to access copyrighted content, and I’ve never held an account for any of the networks that require one. I am a proponent of strong and durable copyrights (though not of the duration Disney recently purchased from Congress), I believe in paying copyright owners for their intellectual property (though I am happiest when most of the money goes to the actual creator). To this extent I’d guess I’m substantially in agreement with U2’s Mr. McGuinness.
On the other hand, like the majority of people I have a history of copyright transgression. A clear memory of my history with recorded music is buying a box of Radio Shack 90 minute tapes and recording a couple dozen records from my family’s LP collection the summer before my freshman year of college. I’ve made and received my share of mix tapes (and these days, CDs). I’ve gotten a few copies of CDs burned by friends, although it’s something I don’t ask for and don’t encourage. I’ve downloaded a few oddments that are technically infringing though not copies of commercially available materials, like Danger Mouse’s Grey Album remix, and I’ve downloaded a few (literally, a few) things, via various unorthodox tools, that by my own standards I really should have purchased.
I’m not a saint or a purist about copyright. I’m a realist and occasional opportunist. I bring it up not to proselytize my position or justify my transgressions but to stress that while I’m about to disagree strenuously with most of what Mr. McGuinness has to say about problems in the record industry, my objections are not based on a moral disagreement of what and artist or even that less empathy-inviting organism, the copyright owner, deserves. What I object to is stupid ideas that won’t fix anything and which would cause harm disproportionate to the problem they purport to solve anyway.
Revisit with me a moment the purported motive of Mr. McGuinness’ speech:
What I’m trying do here today is identify a course of action that will benefit all: artists, labels, writers and publishers.
In the first part of this essay I invited examination of this sentiment for what might be missing from it. Of course, the omitted party is the listener, the consumer, the fan.
Is this an inadvertent slip or a rare piece of unvarnished honesty? Have things come to the point that the industry insider sees the listener, the sole and absolute foundation of every iota of their fortunes, as nothing except a problem to be controlled?
I’d argue that whether it is conscious or not, leaving the listener out of the benefits equation is no mistake. One thing that’s clear in this speech is that the party line position is obsessed with the idea of stealing. Mr. McGuinness invokes the idea of stealing (and related concepts like thievery, burglary, crime and of course piracy) sixteen times in this speech. This is critical for two reasons. The first is that it is indicative of how thoroughly the listener experience, listener desires and listener rights have been left out of the equation. Mr. McGuinness does not pay even the smallest lip service to the value consumer of recorded music, or to the solution of the industry’s woes as having anything to do with satisfying the consumer’s desires or expectations. The closest he comes to addressing the fan as anything other than a presumed thief is his argument that people are enjoying live concerts more than ever, as based on the “generally unresisted” trend towards increasing ticket costs.
The second thing this identification of listener as thief illustrates is that it has become fundamentally unquestioned dogma within the record industry that the decline of major-label CD sales has been caused exclusively by illegal file sharing. There is not a hint of alternative or complimentary causes for the declining fortunes of the CD in this speech. And indeed this sentiment has been largely picked up and echoed by most mainstream media coverage. For the most part, the only thing that varies in this assessment are opinions on how the industry let the situation get so out of hand, and what can be done to rectify it now.
Leading the charge on the “what now” front is another commonplace component of the party line: the belief that there is, at least theoretically, a technical fix for the problem of file sharing. The speech invokes the SDMI as an example of what went wrong with the industry’s response to the problem of file sharing in the 90s. It is telling that the only culprit identified for the failure of this initiative is the US government’s “overzealous” protection of the public from “cartel-like behaviour.”
The latest take on DRM isn’t the only technical fix McGuinness proposes. A somewhat new facet of his thesis is the preposterous claim that ISPs could easily detect and disrupt file sharing traffic of unauthorized copies of copyrighted materials if they wished to do so. The examples McGuinness provides in the full speech reveal a depth of ignorance about what the internet is - indeed, what it means to “share files” - that is all too common in the record industry - and that might amuse if it was not the foundation of so much ill-founded and harmful ideas about changing government policy.
Which leads us to the third predictable leg on this tripod of industry-standard arguments. First, the dominant role of the consumer is intrinsically as a thief. Second, that the offending activity - file sharing - could be disrupted by a technical fix. And finally, that if the gatekeepers of this nefarious filesharing paradise, the ISPs, cannot be convinced to voluntarily deny the thieving consumer access to their stolen files via technological intervention, they should be compelled to do so by law.
These are all pretty much versions of arguments that the industry have been pushing for a decade - the relatively new component is the focus on ISPs and digital hardware manufacturers as the primary targets of ire and the perceived source of remedy.
It’s not really a surprising change in position. The industry’s only extant “solution” to the issue of file sharing - civil suits against individuals - have been an extravagant failure, and indeed statements made during the recently publicized first such suit to go to trial suggest that it has been a costly failure.
The shift of focus to players with deep pockets is inevitable. McGuinness takes what is coming to be a common tactic, to lay the blame of the situation at the anarchistic leanings of the silicon valley crowd - their “hippy values.” Of course, the same sort of pejorative assessment of communistic values has been slapped on anyone who has suggested that the increasing accessibility of information is an inevitable outcome of the information age, and that demanding that the technology makers and gatekeepers of the information infrastructure fundamentally alter their business to cater to the content crowd is rather the tail wagging the dog.
And really that part of it is just smoke, anyway, a bit of rhetorical flourish. The real meat of the argument is summed up in one question: “who’s got our money?” It is a sentiment that is mirrored in the idea that music industry “assets are exploited by the buyers” of MP3 players (the legal use of format-shifted tracks from legally owned CDs is ignored as usual), or the response to the existence of premium cost internet access for “heavy downloaders” with the rhetorical question “isn’t that our money?”
While it’s impossible to say for sure, I suspect that this line of reasoning will characterize the next act in this sad farce of the record industry’s decline. In the next chapter, I’ll examine these arguments about the causes and remedies of the record industry’s sad estate, and whether they’re likely to find much relief out of the pockets of Apple and Comcast.
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
Wednesday, February 13, 2008
Sympathy for the Devil: the plight of the record industry, Part 1
Part One - Part Two - Part Three - Part Four
Prologue
Recently I went looking for commentary about the decline of the record industry. Before anything else, I’ll say that what I’m defining as the “record industry” for these purposes is the Big Four: EMI, Sony BMG, Universal and Warner. My motivation is that there is a tale being told about what’s supposedly gone wrong in the business of music. Indeed it has been repeated so frequently that it is virtually uncontested in the mainstream media. And that’s a shame, because if the story isn’t critically examined the opportunities to learn from it is lost. Lots of other people, many better equipped than me, are examining this story. But the party line is so overwhelmingly over-represented in the media that there is always room for another perspective.
1: U2, Brutus?
What got me thinking about all this again was the transcript of this speech, proudly displayed on U2’s official website [Note - it's since dropped off their front page, and U2 does not seem particularly interested in people accessing older website content, so I've switched this link to a hopefully more stable location], by their longtime manager Paul McGuinness, regarding the woes of the music industry. Mr. McGuinness states his goal in the speech:
What I’m trying do here today is identify a course of action that will benefit all: artists, labels, writers and publishers.
Take a moment to reread that statement and see if you can spot the stake holder that is arguably missing from this assessment, because this omission contains the thesis of my later arguments.
It is very worthwhile to read this entire speech as a representative sample of how an industry insider with every reason to consider himself an expert on the topic understands the declining fortunes of, in particular, the CD business for the 4 major labels. But I’ll highlight what I see as the major points and trends in this analysis. Here’s a excerpted rendition of his speech.
Record companies... allowed an entire collection of digital industries to arise that enabled the consumer to steal with impunity the very recorded music that had previously been paid for...
The SDMI (Secure Digital Music Initiative)... and similar attempts... have partly been thwarted by competition rules. The US government has sometimes been overzealous in protecting the public from cartel-like behaviour...
...Though I may be critical of the ways in which the digital space has been faced by the industry I am also genuinely sympathetic and moved by the human fallout... it is terrible that a direct effect of piracy and thievery has been the destruction of so many careers...
...There is one effective thing the majors could do... I quote from Josh Tyrangiel in Time Magazine: -“The smartest thing would be for the majors to collaborate on the creation of the ultimate digital-distribution hub...’
There is technology now, that the worldwide industry could adopt, which enables content owners to track every legitimate digital download transaction... This system... is called SIMRAN... I should disclose that I’m one of their investors...
Sadly, the recent innovative Radiohead release... seems to have backfired to some extent. It seems that the majority of downloads were through illegal P2P download services like BitTorrent and LimeWire... Even Radiohead’s honesty box principle showed that if not constrained, the customer will steal music...
It’s interesting to look at the character of the individuals who built the industries that resulted from the arrival of the microprocessor. Most of them came out of the so-called counterculture on the west coast of America. Their values were hippy values...
I’ve met a lot of today’s heroes of Silicon Valley. Most of them don’t really think of themselves as makers of burglary kits... I call on them today to start... taking responsibility for protecting the music they are distributing and... by commercial agreements, sharing their enormous revenues with the content makers and owners...
For ISPs in general, the days of prevaricating over their responsibilities for helping protect music must end... [W]hen the US Digital Millennium Copyright Act and the EU Electronic Commerce Directive were drawn up, legislators were concerned to offer safe harbours restricting the responsibilities of ISPs who acted as a “mere conduit”... [A]s it turned, the “Safe Harbour” concept was really a Thieves’ Charter... It is time for ISPs to be real partners. The safe harbours of the 1990s are no longer appropriate, and if ISPs do not cooperate voluntarily there will need to be legislation to require them to cooperate.
...The truth is that whatever business model you are building, you cannot compete with billions of illegal files free on P2P networks.
ISPs could implement a policy of disconnection in very quick time. Filtering is also feasible... There are many other examples that prove the ability of ISPs to switch off selectively activity they have a problem with... We must shame [ISPs] into wanting to help us. Their snouts have been at our trough feeding free for too long.
There’s a huge commercial partnership opportunity there as well. For me, the business model of the future is one where music is bundled into an ISP or other subscription service and the revenues are shared between the distributor and the content owners.
I believe this is realistic; the last few years have shown clear proof of the power of ISPs and cable companies to bundle packages of content and get more money out of their subscribers. In the UK, most ISPs offer different tiers of services, with a higher monthly fee for heavy downloaders. Why are there ‘heavy’ downloaders? Isn’t that our money?
Universal – U2’s label - recently struck a deal with Microsoft that sees it receive a cut of the revenues generated by sales of the Zune MP3 player... [it] follows from the U2/Apple deal, the principle that the hardware makers should share with the content owners whose assets are exploited by the buyers of their machines. The record companies should never again allow industries to arise that make billions off their content without looking for a piece of that business.
So, to conclude – Who’s got our money and what can we do?
I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multi billion dollar industries that benefit from these countless tiny crimes... the message to government is this: ISP responsibility is not a luxury for possible contemplation in the future. It is a necessity for implementation TODAY – by legislation if voluntary means fail.
All emphasis added.
Oh my, I seem to have consumed the bulk of my first chapter restating Mr. McGuinness’ copyright-protected content. But I’m sure he wouldn’t mind... After all, I’m helping to spread his good word about the salvation of the record industry, right?
The next chapter will be an examination of whether the party line gives a complete picture of the plight of the record industry.
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
Prologue
Recently I went looking for commentary about the decline of the record industry. Before anything else, I’ll say that what I’m defining as the “record industry” for these purposes is the Big Four: EMI, Sony BMG, Universal and Warner. My motivation is that there is a tale being told about what’s supposedly gone wrong in the business of music. Indeed it has been repeated so frequently that it is virtually uncontested in the mainstream media. And that’s a shame, because if the story isn’t critically examined the opportunities to learn from it is lost. Lots of other people, many better equipped than me, are examining this story. But the party line is so overwhelmingly over-represented in the media that there is always room for another perspective.
1: U2, Brutus?
What got me thinking about all this again was the transcript of this speech, proudly displayed on U2’s official website [Note - it's since dropped off their front page, and U2 does not seem particularly interested in people accessing older website content, so I've switched this link to a hopefully more stable location], by their longtime manager Paul McGuinness, regarding the woes of the music industry. Mr. McGuinness states his goal in the speech:
What I’m trying do here today is identify a course of action that will benefit all: artists, labels, writers and publishers.
Take a moment to reread that statement and see if you can spot the stake holder that is arguably missing from this assessment, because this omission contains the thesis of my later arguments.
It is very worthwhile to read this entire speech as a representative sample of how an industry insider with every reason to consider himself an expert on the topic understands the declining fortunes of, in particular, the CD business for the 4 major labels. But I’ll highlight what I see as the major points and trends in this analysis. Here’s a excerpted rendition of his speech.
Record companies... allowed an entire collection of digital industries to arise that enabled the consumer to steal with impunity the very recorded music that had previously been paid for...
The SDMI (Secure Digital Music Initiative)... and similar attempts... have partly been thwarted by competition rules. The US government has sometimes been overzealous in protecting the public from cartel-like behaviour...
...Though I may be critical of the ways in which the digital space has been faced by the industry I am also genuinely sympathetic and moved by the human fallout... it is terrible that a direct effect of piracy and thievery has been the destruction of so many careers...
...There is one effective thing the majors could do... I quote from Josh Tyrangiel in Time Magazine: -“The smartest thing would be for the majors to collaborate on the creation of the ultimate digital-distribution hub...’
There is technology now, that the worldwide industry could adopt, which enables content owners to track every legitimate digital download transaction... This system... is called SIMRAN... I should disclose that I’m one of their investors...
Sadly, the recent innovative Radiohead release... seems to have backfired to some extent. It seems that the majority of downloads were through illegal P2P download services like BitTorrent and LimeWire... Even Radiohead’s honesty box principle showed that if not constrained, the customer will steal music...
It’s interesting to look at the character of the individuals who built the industries that resulted from the arrival of the microprocessor. Most of them came out of the so-called counterculture on the west coast of America. Their values were hippy values...
I’ve met a lot of today’s heroes of Silicon Valley. Most of them don’t really think of themselves as makers of burglary kits... I call on them today to start... taking responsibility for protecting the music they are distributing and... by commercial agreements, sharing their enormous revenues with the content makers and owners...
For ISPs in general, the days of prevaricating over their responsibilities for helping protect music must end... [W]hen the US Digital Millennium Copyright Act and the EU Electronic Commerce Directive were drawn up, legislators were concerned to offer safe harbours restricting the responsibilities of ISPs who acted as a “mere conduit”... [A]s it turned, the “Safe Harbour” concept was really a Thieves’ Charter... It is time for ISPs to be real partners. The safe harbours of the 1990s are no longer appropriate, and if ISPs do not cooperate voluntarily there will need to be legislation to require them to cooperate.
...The truth is that whatever business model you are building, you cannot compete with billions of illegal files free on P2P networks.
ISPs could implement a policy of disconnection in very quick time. Filtering is also feasible... There are many other examples that prove the ability of ISPs to switch off selectively activity they have a problem with... We must shame [ISPs] into wanting to help us. Their snouts have been at our trough feeding free for too long.
There’s a huge commercial partnership opportunity there as well. For me, the business model of the future is one where music is bundled into an ISP or other subscription service and the revenues are shared between the distributor and the content owners.
I believe this is realistic; the last few years have shown clear proof of the power of ISPs and cable companies to bundle packages of content and get more money out of their subscribers. In the UK, most ISPs offer different tiers of services, with a higher monthly fee for heavy downloaders. Why are there ‘heavy’ downloaders? Isn’t that our money?
Universal – U2’s label - recently struck a deal with Microsoft that sees it receive a cut of the revenues generated by sales of the Zune MP3 player... [it] follows from the U2/Apple deal, the principle that the hardware makers should share with the content owners whose assets are exploited by the buyers of their machines. The record companies should never again allow industries to arise that make billions off their content without looking for a piece of that business.
So, to conclude – Who’s got our money and what can we do?
I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multi billion dollar industries that benefit from these countless tiny crimes... the message to government is this: ISP responsibility is not a luxury for possible contemplation in the future. It is a necessity for implementation TODAY – by legislation if voluntary means fail.
All emphasis added.
Oh my, I seem to have consumed the bulk of my first chapter restating Mr. McGuinness’ copyright-protected content. But I’m sure he wouldn’t mind... After all, I’m helping to spread his good word about the salvation of the record industry, right?
The next chapter will be an examination of whether the party line gives a complete picture of the plight of the record industry.
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
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