I tend to get in over my head when I get into serial essays like this... The same thing happened when I gamely attacked the history of recorded music. I mean, damn, that's a... lot of text. But I am, perhaps, out of my depth.
But beyond that, and (to me at least) much more importantly, I'm tired of reading, thinking and writing about the pop cartels and their minions. Though it's easy to get distracted from it by current events, my whole purpose in writing this thing is not to talk about the big names and their usual games. iTunes is the last major-label-centric store left for me to review for now and I'm looking forward to getting into all the real alternatives and the solo artists - the true independents. I'm sure plenty of other people will chew over the oscillating fortunes of Sony, Universal, Warner and EMI. I'm going to put the focus back on the reviews - with the occasional interview or essay about the real news in the music business: the pioneers who have long been learning to ride the wave of technological change that the major labels are still trying to control.
See previous reviews and submit sites for review at that Index Page
Saturday, March 29, 2008
Thursday, March 27, 2008
Sympathy for the Devil: the plight of the record industry, Part 4
Part One - Part Two - Part Three - Part Four
4: Follow the money
During the unavoidable hiatus between when I posted my third installment on U2 Manager Paul McGuinness’ speech on what needs to be done about the declining fortunes of the music industry and now, I kept having these smack-the-forehead moments, thinking of other things that are wrong with the music industry (besides the Devilish Scourge of Piracy) that I should have discussed. I forgot to talk about the theory that the transition to CD caused a one-time wave of library reformatting purchases that created unsustainable expectations of future growth! The unexpectedly robust used market! I’ve already talked some about how the CD killed the album as a desirable physical package - but I was going to get into how innovators like Radiohead and Nine Inch Nails were turning this liability into an asset with “super-premium” physical offerings directed at the most dedicated fans. Surely I should have said more about “real” (that is to say commercially motivated) piracy, and why the industry virtually ignores all of the other forms of unauthorized duplication and distribution besides filesharing, and how there’s a prominent 14 dollar and a 10 dollar and a FIVE DOLLAR rack of bargain DVDs in Target, but the only front-of-the-store “bargain” CD rack is like 13 dollars, or how now even Walmart is slapping up the industry for its inflated prices (okay, I couldn’t have mentioned that one because it only came up this week).
I’m pretty sure that list could go on and on. Note only one thing about most of these ideas though: they involve the record industry fixing things that it is doing wrong and doing things on the basis of what their customers want.
Mr. McGuinness has a different notion about the whole business, as I’ve noted, in that it primarily revolves around characterizing his client’s customers as thieves. He does not, however, completely absolve the record industry of blame - though what he does saddle it with is very narrow and particular: mostly, and this is a familiar refrain all over the industry, with not reacting quickly or effectively to the amazing digital audio revolution - or, as Mr. McGuinness likes to think of it, the arising of a “collection of digital industries... that enabled the consumer to steal with impunity.” Mr. McGuinness fingers in particular the failure of the Secure Digital Music Initiative, the pan-industry effort to create universal, unbreakable DRM on digital audio files. Even here, he has a funny way of looking at the situation, laying the blame for SDMI’s failure at the feet of “competition rules,” accusing the U.S. (government, presumably) of being “overzealous in protecting the public from cartel-like behaviour.”
This is a remarkably specious version of the story of the failure of SDMI - beyond omitting its most ignoble side track, it ignores all the major failings of the SDMI: that it promoted a technology that was fundamentally unsound, that would have required a level of cooperative interaction between media and consumer electronics companies that has never been achieved, all in service of forcing the public to make a complete technological transition that no consumer, pirate or not, wanted, and which would serve only one stakeholder, the content industry.
The record industry didn’t learn the lesson of the futility of technological control with the effective collapse of the SDMI in 2001, it didn’t learn it with the Sony BMG rootkit scandal of 2005, and despite recent concessions to the sale of DRM-free MP3s, it apparently hasn’t learned it’s lesson as of 2008. While he avoids mention of the largely discredited concept of digital rights management, McGuinness inserts a plug for some proprietary tracking scheme (and it is worthwhile here to remember that while DRM has become synonymous with anti-copying technology, rights management is a much broader concept that is far from dead) called SIMRAN. There isn’t much readily available information to be had on this at the moment, but the specifics are hardly important. One can almost feel sympathy for the music industry, that after who knows how many millions have been flushed on DRM (SDMI member companies paid millions in combined membership fees alone, for exactly nothing), they are still paying up to these snake oil merchants.
Although even weirder than this aside about some obscure DRM technology is what McGuinness offers it in service of: recommending, apparently, this guy’s opinion that the major labels should create “the ultimate digital-distribution hub, a place where every band can sell its wares at the price point of its choosing” - in order to compete with the Apple iTunes Music Store’s “dominance.” We’ll take a closer look at the sort of thing this might actually be describing at the conclusion of this article: for now it’s worth pointing out the curious failure to make even a nod towards any of the industry’s many failed attempts at harnessing a digital marketplace - as well as Mr. McGuinness’ assumption that the digital marketplace would best be served by essentially having a single provider... but then we already know about his affection for “cartel-like behaviour.” If only that nasty U.S. government doesn’t thwart it! It’s also worth noting that Mr. McGuinness is apparently oblivious to the fact that there is already a very serious contender in the ring making a play for Apple’s position of dominance... Perhaps because it appears that U2 has elected not to make it’s catalog available on the nation’s #2 digital music retailer.
A whole lot more interesting than these perplexing asides about how the record industry might take the reins of selling music online ten years down the road, however, is real meat of Mr. McGuinness’ “solution” for saving the ailing industry. I had a pretty complex assessment of it started, in fact, but screw it: I’m sick of Mr. McGuinness, I’m sick of trying to navigate reality through the distorted lens of the record industry, so let’s nutshell this business and be done with it: basically, McGuinness spends the better part of his conclusion proposing the following set up: revoke the safe-harbor provisions that protect ISPs from being encumbered with the responsibility for preventing copyright transgressions, force them to punish their customers for file sharing, and somehow get some money out of them. He’s even got a snappy summary of what this is all about: “who’s got our money and what can we do?”
All technical and legal and ethical arguments aside, this, I think is the crux of this business. “Our money.” The record industry isn’t asking “what do our customers want.” It isn’t asking “what can we do to become one of the sought-after providers in a new, still-emerging marketplace?” It isn’t asking “what’s next,” it’s just asking “where’s our money.” People like Mr. McGuinness seem to honestly believe that the four billion or so in annual revenues that have vanished since the record industry peaked in the late nineties is in some sense still out there. Again, I find myself almost sympathetic, because in this misapprehension it seems quite likely that the record industry will squander what it’s got left pursuing that very phantom: their mythical missing money, which the McGuinneses of the world so blithely assume they are entitled to and naively aspire to wrest away from the supposed enablers of what is a largely fictional understanding of what happened to the actual money that used to get spent on CDs.
The reality is that digitization, compression and file sharing did not devalue recorded music. The industry devalued it in a dozen different ways, from the content to the cost to the package, and then computers and the internet provided many people with an alternative that allowed them to have their cake and eat it too. But the thing is, even putting aside the technical issue of whether file sharing could ever be effectively thwarted, people would still have the same money to spend and the same choices to make about how to spend it. If it could ever come down to it that they couldn’t have their cake and eat it too, people would just eat the damn cake - which is to say, they would buy their DVDs and video games and find some other path to a music fix. They sure as hell aren’t likely to increase their music budget for what the major labels have on offer.
In a sense, the idea of trying to shake down ISPs for “lost” revenue is a pragmatic response to this reality: CD revenues in the conventional, sell-’em-for-$15 in a big box store model aren’t going to come back ever. It’s probably why, at least as an idea to talk about, versions of this - like a de facto tax on bandwidth - are finding some traction in this discussion.
I suppose there could come to be some reality, however odious, to this sort of approach if the rest of the media - especially television and the movies - were to get involved. As it stands, the idea of the major record labels managing to extort anything like a $5 surcharge out of the ISPs, whose revenues completely dwarf those of the music business, even in its post-21st century heyday, is laughable - as is, for that matter, the idea of them out-lobbying the ISPs to significantly adjust the safe harbor provisions that Mr. McGuinness finds so unfair.
Then again, what do I know?
I’ve been writing intermittently for weeks and over many pages about Mr. McGuinness’ speech because it is a compendious representation of the wrong-headed thinking that has led the music industry into its present revenue spiral. I think that it is in this notion of enforcing some kind of statutory compensation from ISPs that the central failing of the whole industry line is revealed. There is one glaring aspect of this latest record industry boondoggle that really infuriates me - even beyond the idea of getting charged for the ostensible impact of an activity I don’t personally engage in.
It is the justification, given by Mr. McGuinness in his speech and oft repeated in this discussion, that this sort of mechanism is necessary because “whatever business model you are building, you cannot compete with billions of illegal files free on P2P networks.”
“You can’t compete with free” is the cheap, unimaginative protest of an industry that spent a decade trying to figure out how not to change and now wants everyone to pay for the consequences regardless of whether they have any stake in it or not. Independent artists are competing with free right now. High profile experiments like Radiohead’s In Rainbows and Nine Inch Nails’ Ghosts I-IV are not only competing with free, they are supplying the free in the same locus as the option to buy. This isn’t about saving making music as a business, whether people like Paul McGuinness really believe it is or not - it is about preserving the former hegemony of the major labels - engineering and controlling a compulsory system to replace real innovation in a new medium that they have never understood or effectively exploited.
And that’s almost enough about that. Next time I’ll tell you how I really feel about it all, in a brief (no, seriously) coda on why I’m going to try really hard not to write any more essays like this. Then, a music store review! Because this is, after all, a digital music store review site. I’ll be critiquing a recent purchase from the still clinging to the number one spot big kahuna, none other than the iTunes Music Store. And coming up after that, an interview with someone who’s not a big jerk like Paul McGuinness. Oh man, it’s going to be great!
Meanwhile, for those pining to read more, here's a selection of some of the more interesting articles I read trying to wrap my head around what’s going on in the business of music.
The Record Industry’s Decline at Rolling Stone
A Brave New World: the music Biz at the Dawn of 2008 at Ars Technica
The music industry: From major to minor at The Economist
DRM, lock-ins and piracy: all red herrings for a music industry in trouble at Ars Technica
Recorded Music and Music Publishing by Enders Analysis (includes link to report pdf)
Fear May Not Spur CD Sales at Wired Magazine
RIAA’s Statistics Don’t Add Up to Piracy
The rest of this essay:
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
4: Follow the money
During the unavoidable hiatus between when I posted my third installment on U2 Manager Paul McGuinness’ speech on what needs to be done about the declining fortunes of the music industry and now, I kept having these smack-the-forehead moments, thinking of other things that are wrong with the music industry (besides the Devilish Scourge of Piracy) that I should have discussed. I forgot to talk about the theory that the transition to CD caused a one-time wave of library reformatting purchases that created unsustainable expectations of future growth! The unexpectedly robust used market! I’ve already talked some about how the CD killed the album as a desirable physical package - but I was going to get into how innovators like Radiohead and Nine Inch Nails were turning this liability into an asset with “super-premium” physical offerings directed at the most dedicated fans. Surely I should have said more about “real” (that is to say commercially motivated) piracy, and why the industry virtually ignores all of the other forms of unauthorized duplication and distribution besides filesharing, and how there’s a prominent 14 dollar and a 10 dollar and a FIVE DOLLAR rack of bargain DVDs in Target, but the only front-of-the-store “bargain” CD rack is like 13 dollars, or how now even Walmart is slapping up the industry for its inflated prices (okay, I couldn’t have mentioned that one because it only came up this week).
I’m pretty sure that list could go on and on. Note only one thing about most of these ideas though: they involve the record industry fixing things that it is doing wrong and doing things on the basis of what their customers want.
Mr. McGuinness has a different notion about the whole business, as I’ve noted, in that it primarily revolves around characterizing his client’s customers as thieves. He does not, however, completely absolve the record industry of blame - though what he does saddle it with is very narrow and particular: mostly, and this is a familiar refrain all over the industry, with not reacting quickly or effectively to the amazing digital audio revolution - or, as Mr. McGuinness likes to think of it, the arising of a “collection of digital industries... that enabled the consumer to steal with impunity.” Mr. McGuinness fingers in particular the failure of the Secure Digital Music Initiative, the pan-industry effort to create universal, unbreakable DRM on digital audio files. Even here, he has a funny way of looking at the situation, laying the blame for SDMI’s failure at the feet of “competition rules,” accusing the U.S. (government, presumably) of being “overzealous in protecting the public from cartel-like behaviour.”
This is a remarkably specious version of the story of the failure of SDMI - beyond omitting its most ignoble side track, it ignores all the major failings of the SDMI: that it promoted a technology that was fundamentally unsound, that would have required a level of cooperative interaction between media and consumer electronics companies that has never been achieved, all in service of forcing the public to make a complete technological transition that no consumer, pirate or not, wanted, and which would serve only one stakeholder, the content industry.
The record industry didn’t learn the lesson of the futility of technological control with the effective collapse of the SDMI in 2001, it didn’t learn it with the Sony BMG rootkit scandal of 2005, and despite recent concessions to the sale of DRM-free MP3s, it apparently hasn’t learned it’s lesson as of 2008. While he avoids mention of the largely discredited concept of digital rights management, McGuinness inserts a plug for some proprietary tracking scheme (and it is worthwhile here to remember that while DRM has become synonymous with anti-copying technology, rights management is a much broader concept that is far from dead) called SIMRAN. There isn’t much readily available information to be had on this at the moment, but the specifics are hardly important. One can almost feel sympathy for the music industry, that after who knows how many millions have been flushed on DRM (SDMI member companies paid millions in combined membership fees alone, for exactly nothing), they are still paying up to these snake oil merchants.
Although even weirder than this aside about some obscure DRM technology is what McGuinness offers it in service of: recommending, apparently, this guy’s opinion that the major labels should create “the ultimate digital-distribution hub, a place where every band can sell its wares at the price point of its choosing” - in order to compete with the Apple iTunes Music Store’s “dominance.” We’ll take a closer look at the sort of thing this might actually be describing at the conclusion of this article: for now it’s worth pointing out the curious failure to make even a nod towards any of the industry’s many failed attempts at harnessing a digital marketplace - as well as Mr. McGuinness’ assumption that the digital marketplace would best be served by essentially having a single provider... but then we already know about his affection for “cartel-like behaviour.” If only that nasty U.S. government doesn’t thwart it! It’s also worth noting that Mr. McGuinness is apparently oblivious to the fact that there is already a very serious contender in the ring making a play for Apple’s position of dominance... Perhaps because it appears that U2 has elected not to make it’s catalog available on the nation’s #2 digital music retailer.
A whole lot more interesting than these perplexing asides about how the record industry might take the reins of selling music online ten years down the road, however, is real meat of Mr. McGuinness’ “solution” for saving the ailing industry. I had a pretty complex assessment of it started, in fact, but screw it: I’m sick of Mr. McGuinness, I’m sick of trying to navigate reality through the distorted lens of the record industry, so let’s nutshell this business and be done with it: basically, McGuinness spends the better part of his conclusion proposing the following set up: revoke the safe-harbor provisions that protect ISPs from being encumbered with the responsibility for preventing copyright transgressions, force them to punish their customers for file sharing, and somehow get some money out of them. He’s even got a snappy summary of what this is all about: “who’s got our money and what can we do?”
All technical and legal and ethical arguments aside, this, I think is the crux of this business. “Our money.” The record industry isn’t asking “what do our customers want.” It isn’t asking “what can we do to become one of the sought-after providers in a new, still-emerging marketplace?” It isn’t asking “what’s next,” it’s just asking “where’s our money.” People like Mr. McGuinness seem to honestly believe that the four billion or so in annual revenues that have vanished since the record industry peaked in the late nineties is in some sense still out there. Again, I find myself almost sympathetic, because in this misapprehension it seems quite likely that the record industry will squander what it’s got left pursuing that very phantom: their mythical missing money, which the McGuinneses of the world so blithely assume they are entitled to and naively aspire to wrest away from the supposed enablers of what is a largely fictional understanding of what happened to the actual money that used to get spent on CDs.
The reality is that digitization, compression and file sharing did not devalue recorded music. The industry devalued it in a dozen different ways, from the content to the cost to the package, and then computers and the internet provided many people with an alternative that allowed them to have their cake and eat it too. But the thing is, even putting aside the technical issue of whether file sharing could ever be effectively thwarted, people would still have the same money to spend and the same choices to make about how to spend it. If it could ever come down to it that they couldn’t have their cake and eat it too, people would just eat the damn cake - which is to say, they would buy their DVDs and video games and find some other path to a music fix. They sure as hell aren’t likely to increase their music budget for what the major labels have on offer.
In a sense, the idea of trying to shake down ISPs for “lost” revenue is a pragmatic response to this reality: CD revenues in the conventional, sell-’em-for-$15 in a big box store model aren’t going to come back ever. It’s probably why, at least as an idea to talk about, versions of this - like a de facto tax on bandwidth - are finding some traction in this discussion.
I suppose there could come to be some reality, however odious, to this sort of approach if the rest of the media - especially television and the movies - were to get involved. As it stands, the idea of the major record labels managing to extort anything like a $5 surcharge out of the ISPs, whose revenues completely dwarf those of the music business, even in its post-21st century heyday, is laughable - as is, for that matter, the idea of them out-lobbying the ISPs to significantly adjust the safe harbor provisions that Mr. McGuinness finds so unfair.
Then again, what do I know?
I’ve been writing intermittently for weeks and over many pages about Mr. McGuinness’ speech because it is a compendious representation of the wrong-headed thinking that has led the music industry into its present revenue spiral. I think that it is in this notion of enforcing some kind of statutory compensation from ISPs that the central failing of the whole industry line is revealed. There is one glaring aspect of this latest record industry boondoggle that really infuriates me - even beyond the idea of getting charged for the ostensible impact of an activity I don’t personally engage in.
It is the justification, given by Mr. McGuinness in his speech and oft repeated in this discussion, that this sort of mechanism is necessary because “whatever business model you are building, you cannot compete with billions of illegal files free on P2P networks.”
“You can’t compete with free” is the cheap, unimaginative protest of an industry that spent a decade trying to figure out how not to change and now wants everyone to pay for the consequences regardless of whether they have any stake in it or not. Independent artists are competing with free right now. High profile experiments like Radiohead’s In Rainbows and Nine Inch Nails’ Ghosts I-IV are not only competing with free, they are supplying the free in the same locus as the option to buy. This isn’t about saving making music as a business, whether people like Paul McGuinness really believe it is or not - it is about preserving the former hegemony of the major labels - engineering and controlling a compulsory system to replace real innovation in a new medium that they have never understood or effectively exploited.
And that’s almost enough about that. Next time I’ll tell you how I really feel about it all, in a brief (no, seriously) coda on why I’m going to try really hard not to write any more essays like this. Then, a music store review! Because this is, after all, a digital music store review site. I’ll be critiquing a recent purchase from the still clinging to the number one spot big kahuna, none other than the iTunes Music Store. And coming up after that, an interview with someone who’s not a big jerk like Paul McGuinness. Oh man, it’s going to be great!
Meanwhile, for those pining to read more, here's a selection of some of the more interesting articles I read trying to wrap my head around what’s going on in the business of music.
The Record Industry’s Decline at Rolling Stone
A Brave New World: the music Biz at the Dawn of 2008 at Ars Technica
The music industry: From major to minor at The Economist
DRM, lock-ins and piracy: all red herrings for a music industry in trouble at Ars Technica
Recorded Music and Music Publishing by Enders Analysis (includes link to report pdf)
Fear May Not Spur CD Sales at Wired Magazine
RIAA’s Statistics Don’t Add Up to Piracy
The rest of this essay:
Part One - Part Two - Part Three - Part Four
See previous reviews and submit sites for review at that Index Page
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