Embrace file-sharing, or die (part3)
III. An Argument for Downloaded Music
It could be argued that MP3s are the greatest marketing tool ever to come along for the music industry. If your music is not being downloaded, then you're in trouble. If you can't give it away, you certainly can't sell it. Daniel Bedingfield recently had a top 3 song on the radio, with "Gotta Get Thru This." However, his music was hardly available through any of the P2P networks. His record lasted on the Billboard Top 200 for less than a month, even though the single had been on radio playlists all over the country for several months. It's also been widely reported that the most downloaded album of all time was "The Eminem Show," by Eminem. It was downloaded so heavily that Interscope took the unusual step of releasing the album a week early due to the rampant online sharing of tracks from the album. Fast-forward to the end of 2002, and "The Eminem Show" is the best-selling album of the year. This seems to indicate the opposite of what the RIAA would have you believe. When people share MP3s, more music is sold, not less.
As VH1.com recently reported, at least one company believes that file-sharing is good for business, and that it's a "promotional tool and boosts the sales of albums that deserve it." M.S.C. Music & Entertainment is encouraging listeners to download 20 tracks from rapper Tech N9ne's new album, for free. "The major labels can no longer fool the consumer. They don't want you to sample their music because they know that if the fans realize there are only two good songs on a record, you will not buy it ... We believe in our product."
50 Cent, Eminem's newest talent and rap's current street king, sees an advantage to having his debut album, "Get Rich or Die Trying," available before the release date:
"The bootleggers are gonna go crazy with this record. They understand how much of a presence I have in the streets. They'll probably get the record two weeks before the album actually drops and it'll be all over the place ... I believe word of mouth is just gonna generate more sales. Consistency is the key to all success. If I consistently put out good music, if they buy the bootleg this go-around, it'll guarantee that they purchase the real CD when my next album comes out. I'm in a good space financially so I'm not worked up about the few dollars the bootleggers are gonna get."
There's a provocative piece on P2P.com regarding piracy and on-line distribution titled "Piracy Is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution," by Tim O'Reilly. His article discusses a number of subjects, including:
Obscurity is a far greater threat to authors and creative artists than piracy.
Piracy is progressive taxation.
Customers want to do the right thing, if they can.
Shoplifting is a bigger threat than piracy.
File-sharing networks don't threaten book, music, or film publishing, they threaten existing publishers.
"Free" is eventually replaced by a higher-quality paid service.
Tim O'Reilly is the founder and president of O'Reilly & Associates, thought by many to be the best computer book publisher in the world. He has been a pioneer in the popularization of the Internet. His Global Network Navigator site (GNN, sold to AOL in September 1995) was the first Web portal and the first true commercial site on the World Wide Web. O'Reilly takes a long-term view of the intellectual property problem, as opposed to the short-term view that is characterized by the "sky is falling" rhetoric of both the music (RIAA) and movie (MPAA) business.
O'Reilly's observations about the book business apply to the music business. As with the record industry, the publishing world enjoys only a 10 percent success rate. "More than 100,000 books are published each year ... yet fewer than 10,000 of these new books have any significant sales." And like recording artists and the music business, "Authors think that getting a publisher will be the realization of their dreams, but for so many, it's just the start of a long disappointment."
O'Reilly continues:
"For all of these creative artists, most laboring in obscurity, being well-enough known to be pirated would be a crowning achievement. Piracy is a kind of progressive taxation, which may shave a few percentage points off the sales of well-known artists (and I say "may" because even that point is not proven), in exchange for massive benefits.
"I have watched my 19 year-old daughter and her friends sample countless bands on Napster and Kazaa and, enthusiastic for their music, go out to purchase CDs. My daughter now owns more CDs than I have collected in a lifetime of less exploratory listening. What's more, she has introduced me to her favorite music, and I too have bought CDs as a result. And no, she isn't downloading Britney Spears, but forgotten bands from the 60s, 70s, 80s, and 90s, as well as their musical forebears in other genres. This is music that's difficult to find -- except online -- but, once found, leads to a focused search for CDs, records, and other artifacts. eBay is doing a nice business with much of this material, even if the RIAA fails to see the opportunity."
O'Reilly makes other persuasive observations:
"Piracy is a loaded word, which we used to reserve for wholesale copying and resale of illegitimate product. The music and film industry usage, applying it to peer-to-peer file sharing, is a disservice to honest discussion...
"The simplest way to get customers to stop trading illicit digital copies of music and movies is to give those customers a legitimate alternative, at a fair price...
"The question before us is not whether technologies such as peer-to-peer file sharing will undermine the role of the creative artist or the publisher, but how creative artists can leverage new technologies to increase the visibility of their work. For publishers, the question is whether they will understand how to perform their role in the new medium before someone else does. Publishing is an ecological niche; new publishers will rush in to fill it if the old ones fail to do so...
"New media have historically not replaced but rather augmented and expanded existing media marketplaces, at least in the short term. Opportunities exist to arbitrage between the new distribution medium and the old."
O'Reilly compares an on-line music subscription service to people paying $19.95 a month for an ISP when "free" Internet is available, or $20 to $60 a month for TV programming when there is "free" TV programming:
"Why would you pay for a song that you could get for free? For the same reason that you will buy a book that you could borrow from the public library or buy a DVD of a movie that you could watch on television or rent for the weekend. Convenience, ease-of-use, selection, ability to find what you want, and for enthusiasts, the sheer pleasure of owning something you treasure."
Comparing TV to music, O'Reilly says a lesson that can be learned from television "is that people prefer subscriptions to pay-per-view, except for very special events. What's more, they prefer subscriptions to larger collections of content, rather that single channels. So, people subscribe to 'the movie package,' 'the sports package,' and so on. The recording industry's 'per song' trial balloons may work, but I predict that in the long term, an 'all-you-can-eat' monthly subscription service (perhaps segmented by musical genre) will prevail in the marketplace."
People want what they want and they have made their choices. They will still buy CDs, but they want to download music. The failure of the music business to provide a comparable alternative to peer-to-peer networks is the most logical explanation for the "illegal" downloading of music. And rather than address the problem by examining their own behavior, the music companies declare the consumer to be their enemy, support intrusive, overreaching legislation, and act precisely against their best interests. This remains true even in the face of the recent truce the RIAA agreed to with several technology groups. Rather than realize the profit potential of that about which they complain, they try to kill it, then they try to control it. Now they're trying to control the consumer. As O'Reilly points out in his final paragraph:
"And that's the ultimate lesson. 'Give the wookie what he wants!' as Han Solo said so memorably in the first 'Star Wars' movie. Give it to him in as many ways as you can find, at a fair price, and let him choose which works best for him."
The RIAA tries to "give the wookie what he wants" by giving him what they want. Their newest attempt is with a handful of half-baked music subscription services. The New York Times recently reported that "Jupiter Research expects consumers to pay about $79 million for downloaded songs and CDs in 2003. Subscription services ... are expected to collect about $107 million next year." The Times continues:
"The brewing battles among these services will be over how they package songs, what kind of exclusive access they can offer subscribers to particular artists and whether they can be used for portable devices, stereos and cars."
If subscription services offer a broad range of music and no digital rights management schemes, and properly labeled high-quality files, at a reasonable price with fast downloads, they will have a chance to compete against "free." Unfortunately, it is unlikely that the music business will avoid copy protection issues. Instead, copy protection remains the No. 1 priority for both the music and movie industries. The future of digital media will have movies or songs offered in various ways for various prices. If you want to just play it once, or for a 24-hour period, it will be cheaper than if you want to download it to your hard drive and copy it. If you want it to play on all of your players, you will pay more than if you just want to hear it or see it over the Internet. 2003 will be a crucial year for industry online music subscription services PressPlay (Universal/Sony), MusicNet (BMG/Warners/EMI), and Rhapsody. They will have to develop an approach to these issues that satisfies the demand currently being met by the P2P networks if they hope to compete in this emerging market. Consumers are reluctant to accept limitations on use, so it is unlikely that copy protection will lead to a cure for what ails the music business.
The music business isn't like the movie business, even though both are involved in the digital dissemination of intellectual property. A song is not the same as a movie. Listening to a song on the Internet isn't the same as watching a movie for free on the Internet. It is arguable that downloading a song functions as a substitute for radio, a first step in the process of consumption, while watching a movie is, arguably, the last step in the process of consumption. Consumers may accept limitations on the use of a movie, making it more akin to the licensing of software, but they find it more difficult to accept limitations on the use of a CD they buy or music that they acquire by way of a subscription service. Consumers are used to renting movies; they're used to buying and owning music.
Music companies are more egregious in their abuse of consumers than the movie companies. Consumers don't hate movie companies, but they do hate record companies. The question is, why is this happening and what is going to be done about it? Digital copy protection (known as digital rights management or DRM) will only add fuel to this fire, so expect a very big blaze in 2003. In the end, it will be the music companies that run the risk of being consumed by it. Music companies have the opportunity to adjust to the new realities of digital distribution but instead they cling to their existing business models where they control as much of the distribution channel as possible. It is doubtful that this behavior will be rewarded with increased sales.
The Digital Millennium Copyright Act (DMCA) was passed by Congress in 1998 to address how technological innovation would affect intellectual property. In drawing up the document, Congress looked to the RIAA and similar groups for guidance as to what the law should contain. The Electronic Frontier Foundation (EFF) recently released a study titled "Unintended Consequences: Four Years Under the DMCA" which goes on to detail how the "anti-circumvention" clauses of the DMCA have been used to stifle innovation, censor free speech, and threaten academic/scientific research. These chilling effects of the DMCA contradict and limit the "fair use" doctrine that is an important part of copyright law. Additionally, the digital rights management (DRM) initiatives that the RIAA and MPAA propose to protect their copyrights do nothing to protect the "fair use" rights of consumers.
Record labels are confused and contradictory. They use MP3s in private while they deride them in public. If they're promoting a new band, they'll post the band's songs on P2P networks (often in a covert manner) with the hopes that they'll be traded and talked about in chat rooms. If it's an established act with a history of sales, they'll "spoof" the P2P networks with fake files (also in a covert manner). It's just another way of using MP3s, albeit a subversive and anti-customer way. The RIAA has apparently engaged in "poisoning" P2P networks.
The biggest damage done by downloaded music is the paralysis it has inflicted upon the traditionalists in the music industry. The path to profitability does not include a long and drawn-out legal battle with consumers, yet this is exactly what the RIAA is doing. The choice for NARAS is whether to lead the fight for what's best for the artists or whether to endorse the self-serving positions of the music industry's congressional lobbying group, the RIAA.
There is a convincing piece by Damien Cave on Salon.com titled "File Sharing: Innocent Until Proven Guilty," which argues that there is no proven correlation between downloaded music and the decline in CD sales. He continues to argue in "File Sharing: Guilty As Charged?" that a good deal of the "sky is falling" rhetoric created by the record companies and the RIAA is based on supposition and self-interest. In addition, the article "RIAA's Statistics Don't Add Up to Piracy" analyzes the RIAA's own statistics and argues that they do not support the RIAA's conclusion that downloaded music is the cause for the decline in CD sales. In this detailed analysis, George Ziemann argues that the record industry released 11,900 fewer titles in 2000 than it released in 1999, a 25 percent decrease, yet the total number of units shipped decreased only 10.3 percent and the dollar value of these units fell by only 4.1 percent. It seems that the RIAA is misinterpreting its own statistics. |
