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
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