A couple of weeks ago The Register’s Andrew Orlowski published an interview with Peter Jenner about the future of the major music labels and DRM. A number of blogs picked up the story and wrote about it in a resoundingly positive way.
It certainly starts off well – Peter Jenner is a respected figure in the music industry (he was Pink Floyd’s first manager, as well as managing The Clash and other great artists), and he gets the ball rolling by saying the big labels are “fucked.” That’s an easy way to win over the crowd these days, who generally see big music labels as the antichrist.
He hits on all the points that outrage music consumers – DRM, pay-per-download, and per-device restrictions that force users to pay multiple times for a single song. He says the lables have “raped their whole business model” in the pursuit of short term profits.
But then Jenner goes off the deep end.
Jenner wants the government to step in and save big labels. He’s calling for a mandatory monthly tax in the European Union on broadband Internet and mobile phones of around €4/month that allows consumers to download and consume all the music they want without DRM. Payments will be made to rights holders according to popularity of music – if a song is very popular, it will get a higher percentage of total fees collected.
The idea is based on the UK’s television licensing scheme – if you live in the UK and own a television you are forced to pay a tax of £131.50 per year. The BBC gets these fees – how they spend it is broken down here. The BBC literally has vans roam around the country trying to determine if people who don’t have licenses are watching tv in their house, and there are big fines if you are caught without one. In 1995, 235 people were jailed for not paying the TV tax.
This is exactly how Jenner sees enforcement of the music tax. He says:
And if you swear that you’re not going to listen to any music, you’re not going to pay. It’s going to be very hard for you not to pay, and the network is keeping an eye on you to see you don’t download any music. And if you do without a license, we’ll sue the hell out of you – because you’ve been offered a cheap deal like the TV license.
Why Europeans are not up in arms over this is beyond me. If this were to go through the results are inescapable.
Music industry revenues will be a set size, regardless of the quality or type of music they release. Incentives to innovate will evaporate. There will only be competition for market share, with no attempt to build the size of market or serve less-popular niches. Forget labels building new brands and encouraging early artists to succeed – they’ll bleed existing big names for all they are worth and work hard to keep anything new – labels, artists, and songwriters – out of the market. New entrants just means more competition for a static amount of money. Collusion by existing players will run rampant.
Soon labels will complain that revenues aren’t high enough to sustain their businesses, and demand a higher tax. It will go up, but it will never go down.
And the government will be responsible for enforcing these laws. And they will be putting people who avoid the law in jail.
What I think
I agree with Jenner that the music labels have “raped their own business model” and are in a very difficult situation. The projections that CD sales will decline by 50% over the next few years sound about right to me, given the alternatives that people have online.
But I do not think that the government should step in and help these people. I do not think that we should legislate a tax on broadband Internet access and mobile phones that gives the music industry guaranteed revenue, and guaranteed profits, while simultaneously removing their incentive to innovate and serve niche markets.
Asking the government to prop up a dying industry is always (always) a bad idea. In this case, it is a monumentally stupid, dangerous, and bad idea.
More on this in a later post.
I don’t think this tax would necessarily cause stagnation.. You admit that there will be competition for market share. There are two ways to increase market share: win it from the competition, or increase the size of market and capture the growth.
There are two goals of copyright: 1. To maximize the amount and quality of creative works and (2) to maximize distribution.
This plan would without a doubt increase distribution. As we can already see with other subscription schemes, people who pay a flat fee consume a lot more than those that don’t. Examples: netflix, broadband and the existing music plans.
Does it provide an incentive to create more new material? This may depend a lot on how consumption is measured and the money is distributed. If, for example, p2p downloads are measured, it might become a lot easier for new artists to distribute their music online. People would just download it if they like and freely share it. I’m much more likely to download something if I don’t have to whip out my credit card.
Yes, the whole industry would become a zero-sum game, but that doesn’t mean there will be no competition in it, nor does it prevent new market entrants.
And while it is valid to oppose both this proposal and the TV tax from a free-market standpoint, it should be noted that many regard the BBC to be one of the world’s highest-quality TV stations.
>Yes, the whole industry would become a zero-sum game, but that doesn’t mean there will be no competition in it, nor does it prevent new market entrants.
come on, the music industry would be sending goons after garage bands.
The so called tv licencing is just a bad name for a extortionate tax, There are thousands of people that dont watch the BBC but they still have to pay the tax. Damm people without TV’s still have to pay it.
This music thing is never going to happen, they just wont be enough support for the idea. And what happens to the music that comes in from outside the EU? will it mean we have to pay a “tax” (aka ripoff) so that we can listen to european music only and anything that comes from outside of europe will still be DRM’d? What happens if the website is located in the US? or someone from outside europe tries tto download something from the european sites. The problem is far too complex, requires the cooperation of too many countries and will take years to get off the ground.
er perhaps it is simply the case that the big labels are fucked. Get over it. If mine or your business Michael were threatened by new technology we’d have to adapt, there’d be no new tax introduced to bail us out.
(The BBC is worth every penny.)
Two things about the UK TV licence:
1. The BBC does produce some top quality programming that would not be viable on a commercial basis. Take a look at TV in the USA, or FreeView in the UK. Dross-tastic!
2. You need a licence if you have ANY piece of equipment that can receive the BBC’s output. Yikes! That means if you have a laptop / computer or even a mobile phone you need a licence. Ouch!
Here in Austria we too have are being charged for public television and radio if we own at least one radio or TV.
They are actually thinking about charging it for people that own PCs (as me) only (see current fight in Germany) because the definition for when you have to pay the fee is old and therefore can be applied to a lot of objects.
In return we at least do not have commercial breaks in the TV-shows, movies, etc.
Labels or the RIAA will never be granted such rights here in Austria!
The BBC is worth every penny it’s £130 per building not per appliance and the quality of the output is a million miles ahead of ad supported channels. Imagine a UK where reality television rules and so called “celebrities” are rewarded for being stupid, it would be tabloid television. The BBC adds value they educate and inform its more than TV its radio, online, education programs etc. Do you think SKY would pick up David Attenborough no way it would be the death of content in the UK.
You cannot compare the BBC to this shitty idea to charge a broadband tax for the music industry. It will never work, the corporations don’t have the power they have in the US.
Did anybody actually bother to read the original interview? Peter’s whole point is to take the big four OUT of the game. The idea of a music-tax is (and always has been) to ensure a much fairer distribution of royalties towards the artists.
And it still wouldnt be a zero sum game – a lot of people still want physical evidence of what they bought, be it a CD, DVD, tape, whatever. These physical carriers could then be priced far more reasonable – at 5-6 euros. Also there’s of course the concerts – and not to forget advertising. Hardly anybody realises that advertising licensing music generates roughly the same amount of cash as the whole CD publishing industry does…
I think it’s a great idea, and have been supporting it for many years. And I agree with Jenner that we will get there in a few years. And all the money now going to overblown corporate structures and lawyers can go where it should go – artists.
I’m new to the whole copyright and tax issue but it’s clear some bad things are happening in Europe. Big labels and the music industry seem to put a lot of pressure on European instances and demand a call for action.
Here in Belgium, you pay several times the tax depending on what product you buy. In 2002 they got rid of the taxes for owning a TV or (car)radio, but now they charge you in many different ways. If you buy a PC or a laptop you pay taxes because these ‘can’ reproduce audiovisual creations. Secondly, if you buy a blank CD or DVD, you have to pay tax to auvibel (http://www.auvibel.be) because these also give you the possibility to make copies. Even if you don’t, you have to pay. What’s the consequence? Now you have to buy at least the double of the market price for blank media. The taxes are supposed to be returned to the authors but also depending of the popularity of it’s creation. The rich get more, the poor get less.
I don’t think the BBC tv licensing system and this proposal are really equivalant. Allthough independant the BBC is state owned, it is accountable to parliament and does not operate on a popularist model. The BBC does not make a profit for share holders (as far as I am aware) rather value is measured be quality of programming and other information services to the population. Performance is monitored by the Government.
This is no where near the same as suggesting that we should save these companies by imposing some sort of tax. It is a foolish suggestion, what would make more sense if you wanted to have a tax would be to add music to the list of functions performed by the BBC and increase the tv license fee. The state shouldn’t fund big bussiness in order that they should make a profit, as you say the insentive to innovate will be gone as they have garunteed income no matter who is popular (look at thames water!). The idea is totally flawed!
“Asking the government to prop up a dying industry is always (always) a bad idea.”
Michael, isn’t it a shame that the US still has airlines? They should have been deprived any help or subsidy when they were dying earlier this decade, shouldn’t they?
Most of the comments above have touched on the BBC’s TV license and Government’s industrial policy (protecting dying industries). Both are topics that
– are not what the original post was about;
– have stood the test of extensive political and academic scrutiny (yes, alas governments will always protect formlerly large, dying industries since, generally, they are cash cows which allows them to have good lobbyists and be generous to politicians).
Let’s leave that aside and discuss what the music industry can/should do.
We need to begin by accepting that the current environment is unsatisfactory (to say the least):
– DRM is stupid; it actually rewards/stimulates piracy. The other day I was given an EMI artist’s CD as a gift that came with DRM that prevented me from ripping it to hear on my PC and MP3 player. Since this is the only way I listen to music I have in my to do list to download P2P music piracy software (to date I have, honestly, stayed away from them). Once I get this software I will be tempted to help myself to other stuff.
– RIAA and other national rights bodies are shooting themselves in the foot: by punishing Internet new business models that promote music with the regulations and fees of traditional TV, radio, etc. they are preventing the emergence of legal alternatives and, in the process, helping the illegal outfits flourish.
The idea of a broadband fee is not that ludicrous.
As discussed above, it wouldn’t necessarily elimate innovation. And, anyway, it is already a tried and tested concept. Many, many countries charge a “rights tax” on reproduction media such as blank cassettes and blank CDs. I have never heard opposition to these blank media taxes — perhaps because they were set decades ago; long before the blogosphere emerged.
Micheal Arrington is right. Over time you’d see the record labels asking for this tax to increase. But, the very nature of the tax — multi-country; cross-governmental, directly impacting consumers (read: voters) — would ensure that it would take a long time to agree an increase.
I vote for the tax.
“Why Europeans are not up in arms over this is beyond me.”
1. Because the tax is cheaper than a US cable or satellite subscription.
2. Because the resulting TV is better than that available in the US.
You might as well ask why Europeans aren’t up in arms about being taxed to provide healthcare. If I had the option of paying a UK license fee and getting UK television, I’d take that option any day.
I happen to be against the idea of funding the music industry through taxation, but you need to come up with a much better argument against it than looking at state-funded TV.
“monumentally stupid, dangerous, and bad idea.”
It has the merit of being a new idea. He was promoting a conference where musicians tried to come up with a better model than the current one.
At this stage of the debate, we need more alternatives, unless you want to be stuck with the ones under consideration. What’s your idea?
KineticOnline – It is possible to not pay the TV Tax. We lived in the UK and didnt pay the TV Tax – We didnt have a TV – so it is possible to do. But the TV Police demanded entry to our flat and had a quick search of the flat to make sure that we did not have a TV hidden somewhere.
But does that mean that the ‘Music Police’ get to come and search my hard drive if I say I dont listen to Music.
I am not very keen on a music tax – as it penalises people like me who dont listen to much music.
There is no justifiable reason for the idea of a music tax. The music-industry already receive payment from blank-media (CDs/Tapes), and the notion that they cannot negotiate a deal from the broadband providers is an even more tenuous link to their earnings.
If the music industry is to win this addition, how long before the film-industry looks to get some tax for THEIR future losses? The
The BBC is nothing like this sort of tax. It is a state-owned broadcaster that have rules and regulations on its output and is designed to ensure there is a form of unbiased broadcasting on tv/radio (and nowadays the net). The service is justified not to ensure the longevity of tv but to ensure that a reliable unbias source of news is available. It also co-exists alongside independent networks which fragment the BBCs viewership.
The problem with a music-industry tax is that the music industry has no reason to be owned by government/funded by taxation. They need to develop a model that prevents illegal use of their products/minimizes illegal use of their products.
Consumers have to realise that WE are to blame if WE download music illegally, not the music industry, not DRM. The music industry is fighting a losing battle because people don’t care about the law, and because the law (as it stands) is almost universally (it seems) unpopular.
The difference between this and blank-media is too big for it to be a simple extension of the idea. The blank-media industry needed to find an agreement to ensure that their products could be on sale. The music-industry is infinitely weaker than the whole of the internet – which itself is a global economy. The idea that they could force a tax on something that has billions of other users BEYOND illegal-music is utterly ridiculous. A tax on the medium that play the illegal-content would be a slightly more sensible, but still bad, idea. At least that way the tax is focussed a little more closely on the people more likely to be committing the offence that is ‘ruining’ their industry.
Tax is only there to support things that are in the best interest of the public and are not commercially viable.
The BBC is not a role-model, if a program isn’t commercially viable – it has no audience and is not worth a penny to the general public, I don’t personally like I’m a Celebrity or any of that fluff but the majority do and thats what the BBC needs to show to have any ounce of public service, there is no such thing as a public service that shuns half of the population in favour of educational/elitist crap.
@Stefan (#8):
“These physical carriers could then be priced far more reasonable – at 5-6 euros.”
And so that I have the option of buying a 5-6€ CD I should pay a fixed amount every month?
And what is for the case that I do not buy CDs/mp3s/etc.. ?
It is at your liberty to buy a CD (if overpriced or not).. but why on earth should others be forced to pay the price too just so you can get your music at a cheaper price?
pay-per-device? really? it’s the first time that I’ve ever heard this term. that mean if I download a music and wanna play it in my ipod I have to pay again?!
Mike, I don’t think it’s a bad idea for those reasons, but it is a bad idea. Your arguments are the same as those against the BBC, and that clearly works to some degree, even if it is against many American ideals.
The real problem is in the logistics. How do you keep the rest of the world from downloading music for free that the Europeans would have access to? Music is not like TV. The BBC tv is broadcast out, you can’t just download shows from a website and share them with your friends. (well you can with p2p, but not legally of course, and it is kind of a pain). People elsewhere can’t access the BBC, but songs are small and easy to trade.
Michael, I don’t think it’s based on the TV licensing system – the UK’s collection societies are specifically mentioned.
Take PRS for example, the Performing Right Society. Radio stations, TV stations and even bars and restaurants pay for a music licence, and the money’s divided up among music makers. So for example if you get played a lot on a major radio station, you get paid a lot of royalties.
Similar collection agencies charge royalties on manufactured music products (MCPS, now allied with PRS); there’s even a photocopying royalty paid by businesses to compensate dead-tree publishers for photocopying and another collection scheme (PLR) to compensate authors for library use of their work. The thing about all these different systems is that, with a few rough bits around the edges, they work – which is why you don’t hear of Penguin Books suing Xerox users.
Having a compulsory license system for online content does make sense overall, implementing it as a broadband or per device tax not so much. The models that might enable the genius of the internet are more likely to be related to the ASCAP licensing employed for radio in the US or to the Creative Commons licensing popularised by Lawrence Lessig.
What Might Work.
(I hereby place these ideas in the public domain)
A set of licenses extending the creative commons licensing model.
1. use-with-reporting-metrics
Close to the original YouTube model, you can use it, but you have to report back to the owner the when and where and what was consumed.
2. use-only-from-licensed-distributor
Closest to the iTunes music store model. Drawback is the overhead of managing the license regime.
3. use-only-with-revenue-sharing
You can use it but only if you kickback a set percentage of the revenues gained from that use. Drawback is the likely intrusive nature of any audit procedure.
4. use-limited-by-condition
This is the catchall for complicated licensing, if there is a standard for describing T&Cs in an automated fashion and an open discussion of what the limits of acceptable conditions are this could work. Otherwise we’ll be stuck fighting obtrusive DRM and a abusive clickwrap licenses from now to the heat death of the universe.
The BBC is a great deal if you happen to fit into the left-wing elitist demographic it serves. Not so great a deal if you agree with George Orwell–who modeled Room 101 in the novel 1984 after his experiences at the totalitarian BBC–that the Beeb has a long history of openly supporting the enemies of democracy, freedom and human dignity–from Stalin and Mao, to the Sendero Luminoso, Khmer Rouge all the way to today’s anti-Semitic Islamist hate-mongers.
I’ll stick with free enterprise and leave the 1984 social model to the tea and crumpet set, thanks.
the future of music distribution http://www.tamago.us
As a UK person who doesn’t watch TV I have o say that the BBC isn’t worth 134p per year much less £134. There output is appalling and nowhere near the adventurous nature of US network and pay per view channels (like HBO). Suggesting that I have to pay €4 or whatever a month on the off chance that I may download music is as bonkers as making me pay more for blank cd’s in case I might use them to copy something.
Let the market decide what people want and don’t want and if the market doesn’t want Sony?BMG then tough luck on Sony/BMG
I agree Mike.. if the industry is failing, look for a new niche, innovate, do something, but the government should not help. LONG LIVE LIMEWIRE!
>>And what is for the case that I do not buy CDs/mp3s/etc.. ?
what about businesses, do they get taxed even though their computers/broadband is used to shuttle excel spreadsheets to and fro?
LOL, it’s not that news…
Don’t you know that in Italy (I’m italian) there’s a tax for each blank media you buy? We pay 0.36 euros every 650MB for all kinds of media (ipod,hard disks, cd-rom, dvd+r, etc..) we buy even if it’s for burning the holyday pictures.
All this money is going to the SIAE (something like the RIAA). So it’s the MUSIC TAX you’re talking about in this post.
And yes, it’s really stupid.
I’d love to post ll of my thoughts, but it would take pages.. the quick things that come to mind are these…
A voluntary music tax such as blank cds that are labeled “for music” (which I belive cost more) is one thing, and people can volunteer to offer additional support to the music industry this way.
The current music tax paid (mandatory ascap, bmi, and sesac fees) in the states by restaurants, clubs, the boy scouts for singing campfire songs, and any company that puts “music on hold”, etc. IS a nice way to add some money to artists, but it does not reflect how many independant artists are played each night that are not getting paid and it pads the pockets of artists that have signed thier life (rights) away to one of the big three.
The industry has been killing itself, just like many of the businesses in corporate America that are pushing harder and harder each year to cut costs and raise profits… you can only do this for so long before you reap what is sown.
In the music industry’s hay day you could buy an album (or tape) that had great artwork, tons of info about the artist, lyrics, and more. Ever since the CD came out, we were being sold on “forever better digital technology”, and resold the music we had already bought and paid rights for, on a new medium, only to find out that CDs do not last forever, and the album art and artist info is often reduced to a white page that backs the cd cover which is just sized down album art.
Where is the value?
If I had the CEO spot at BMG, Sony, or Universal I would go back to my roots. Make good music, package it in a way that make people want to show it off and be proud supporters of good artists, and give better value. People buy the soprano’s boxed set because it has a coolness factor to it, not becuase it is impossible to record the shows with a vcr, or find a torrent download. It is also easier to buy, and you don’t feel ripped off because the content is all good, (not 2 good episodes out of 15 like most cds), and the box is glossy, it looks good, the inside is plush and makes you feel like you purchased valuable. – Compare that to the average $15 cd witha flimsy plastic cover and a one page insert with nothing on the back, and downloading the one good song from the album just makes sense.
I also think that DRM is a stupid way to piss off everyone. I can not belive I went through the whole sign up process with musicmatch / yahoo only to find that the 5 songs I bought could not be ported to my portable mp3 player I take to work. I also find it lame to pay a buck a song and get no cover art or band interviews, lyrics or anything – it makes pawn shopping for tapes and cds appear to have more value.
Paying 99 cents for a song is a good idea, I like not having to buy the album filler that i will never use. Pink Floyd would get more monet from me becuase they have more good music, and I would never want to sell it; however, after spending 2 bucks on the latest pop junk that is over played on the radio (giving that label and artist an unfair share of radio royalties), if 6 months later I don’t care to ever hear that crap, I should be able to sell my song for 25 cents, and I should be able to buy someone else’s never-to-be-played-again song for 25 cents if they want to sell it to me. That’s what lots of people do everyday at used cd shops and pawn shops.
Music will always be here, it was here long before the big corporate giants, and it will be here if they all fall. We would still have concerts without them, and my friend down the street has an excellent recording studio in his one bedroom apartment. The labels are not needed like they once were.
Should we be thinking of a mandatory book tax, and newspaper tax as well?
All in all it comes down to value. (or lack thereof)
The current model is broken, well, at least online it is; the model of “what music is really worth at the used cd shop” is obvious, even at $5 a cd, many go unbought, because there are few that have enough good music or album art to warrant a 5 spot.
As someone in the UK I think this is a craptacularly bad idea, why should I have to pay the music labels just because I have broadband???
If they produced some decent bands then I might actually buy their CDs, also if they actually had decent downloads i.e. flac rather than crappy mp3’s I might buy online from them.
As it is I buy the odd CD from small record labels instead.
Mike,
Nice to see your conservative political and economic viewpoint coming through in your analysis of this music tax proposal. I happen to agree with you – this is definitely a case where the market solution is better for everyone involved than the socialist/tax approach that Jenner is recommending here.
Cheers,
NG
My thoughts:
First, Steve@#29 if you have pages of thoughts you can also provide a link to a free blog page. (just a suggestion)
The music tax is well-intentioned, and gets credit for trying to solve the problem. Unfortunately, it is ultimately not going to work for many reasons already discussed.
My belief is that there is no one single answer, but rather a variety of compromises will win out. Basically, the labels ARE fucked, but maybe that reap what you sow stuff rings true. HOWEVER, the labels don’t need to die entirely because they do provide a valuable service in taking and molding raw talent. Also, as Steve and another poster mentioned physical media will always have a place in the market. I remember reading something about CD mastering for optimum sound. (same with Blu-ray/HD DVD etc.) I feel there will always be people willing to pay for that which cannot be duplicated with a simple digital file. Again, like Steve says, the value is in the overall product/image/feeling, not just the song.
Additionally, artists should be able to receive more for their own work, and innovative Internet business models that facilitate this will grow, I believe. You may never stamp out piracy entirely, but the alternatives will be attractive as well.
Thats right Steve@#29
>>>>>>>>>>>>>
If I had the CEO spot at BMG, Sony, or Universal I would go back to my roots. Make good music, package it in a way that make people want to show it off and be proud supporters of good artists, and give better value.
>>>>>>>>>>>>>
Paying 99 cents for a song is a good idea, I like not having to buy the
album filler that i will never use. Pink Floyd would get more monet
from me becuase they have more good music, and I would never want to sell it; however, after spending 2 bucks on the latest pop junk that is over
played on the radio (giving that label and artist an unfair share of radio royalties), if 6 months later I don’t care to ever hear that crap, I should be
able to sell my song for 25 cents, and I should be able to buy someone
else’s never-to-be-played-again song for 25 cents if they want to sell
it to me. That’s what lots of people do everyday at used cd shops and pawn shops.
there is a bugg in wordpress, my comment is all wrong
As a general rule I think government regulation for anything is a pretty bad idea. Propping up the music industry like this will only serve to tighten its grip on the media we consume, further stagnate innovation, and get the government involved in the bad business practices of the RIAA. Why don’t we just let the record companies go out of existance? They’re not needed in todays society. I’d like to see a situation where there are many more smaller labels for whom I’d be comfortable giving my cash to.
Okay… so here is the deal. Lets not use the Taxes for any development or social cause. Lets not spend it for the upliftment of poor or to create employment for the unemployed. But, pay Taxes to music labels & artists because 50 Cent want another $10 million bling, Britney spears want another divorce, Paris Hilton want to do another prono and Maddona want another sex game.
How come these guys should rob everyone’s hard earned money because they strip to get fame and sell music. How come these music artists deserves to get paid over 100 times what a doctor, engineer or researcher is paid. Are they are doing something too much innovative? Are they helping any economy? Are they doing this for any good cause? They just rob this money from people and waste the money.
These music artists do not do something creative, innovative, no hard work or what so ever. Just few days of singing and voila! another $100 million robbed from people and they go on insane fucking spree.
If music labels notice a decrease in thier revenue… who give them a right to steal others hard earned money? and for what cause? Their revenue is decreased simply because they do not deserve it. These music artists & labels are actually a huge golabl economic unbalance and any sort of music taxing would be insane.
Millions of professionals are loosing thier jobs, why don’t these music artists go and pay to them? Those professionals actually might have lost thier job because of listening music at work?
IT Professionals, Developers, Doctors, Engineers & Researchers deserve to be paid much more than a music artist because they develop new innovative technologies, provide medical facilities, develop infrastructure, help people in many ways and also contribute to economy and social cause.
Most of the software giants like Microsoft & Infosys have charitable foundations as well. They never come & complain of piracy, slam you with DRM & ask for taxes.
That is why I HATE TO BUY MUSIC!
Michael:
I had the misfortune of being the Director of Product Management for AOL Music in the early 00’s when we built a couple of subscription services, only to have Warner Music torpedo our efforts to put their catalogue on line (even though we worked at the same company) — So I have some sympathy for your point of view.
One of the things that gets the musci guys howling the loudest is the history of radio. The labels are *still* mad about how radio gets to play their songs without negotiating with them — and that’s *the* key to innovation.
Specifically, compulsory copyright payments.
These are what enable radio to play a song for a fixed fee, and not need to negotiate a license with the myriad of rights holders that may exist for the song that they play.
If the labels want to get teh government involved, great — have the Gordian Knot of multiple rights holders cut by fiat, and have Internet players be able to know the rules for various situations, and pay up accordingly — But take away the ability of the labels to stifle innovation by keeping their catalogs offline.
The “rights of the artists” to keep their music offline are simply silly — You get rights to your stuff because the government grants it through Copyright — and the public good that comes of this already includes radio play and public performance — why not Internet play with some sort of defined payments scheme.
Oh yeah — the reason none of this will occur is because our friends at the labels play Congress better than us here in the valley. Mind you, a fun argument to have here would be talking to Congress about the percentage of foreign ownership fo the big five lables, and how we’re being asked, essentially to prop up the fortunes of foreign stockholders at the expense of American consumers and entrepreneurs.
So — maybe the cure for this Corporatism is a little Jingoism.
why on earth would people even seriously debate the wanton ramblings of an untrained economist and his musings on potential reform for music distribution? this issue is an absolute nonstarter for the entire united states political system…no policy analyst in his/her right mind would even pay attention to the subject, or more importantly, the model used in a region like the uk for consumer entertainment….
the industry will go on as it always has, old labels will pull levers to influence sales in all new and existing channels, and new lables will seek to exploit market inefficiency by pretending to return control and profit to the artists…in the end, the labels will make some money, not a lot, and the intermedaries with solid walls (think itunes) will become the most profitable parts of the industry…all the while, the new artists will continue to keep their day jobs, wondering why it’s become harder and harder to get noticed on the umpteem million new band preview sites…basically the music industry has been adsensed and they’re can be only one….
I think you are off base with your criticism of this plan.
The current music industry system is the one that discourages innovation. It perfectly tuned to push generic homogenized music to mass markets to support its bloated and expensive business model.
By using consumer attention as capital, innovating and appealing to niche markets would be the only way to capture that attention.
According to Pew Internet as of March 2006, 84 million Americans had broadband. According to the EFF “The total annual gross revenues of the music industry today are estimated at $11 billion” That’s gross profit at retail, not including any of the exorbadent costs of selling physical CD’s. At $5 per month per broadband user, they would pull in $5 Billion pure profit. This number would grow with broadband adoption.
This model is both artistically and financially viable. Frankly, its the music industries only option if they hope to stay relevant.
Labels – Profit driven enterprises who:
Want some cash!… Logically they want to make their product the most popular and have the highest margin for them
Often this means:
Labels try to take some of the bands artistic control away from them.
Labels like to have huge chunks of the bands money (some of it is deserved – some of it probably isn’t)
How is this different from the tax system?
Labels will still go for profit.
Probably more money in the industry though… Like I won’t stop buying CD’s or going to concerts or watching Ad’s that use bands songs and hey… That all makes them money too.
My opinion:
If you like the labels… Well.. They have to change. Their business model is failing them. The net means people are exposed to greater variety and alternative styles of music are more accessible.
If you like the tax. Kill the labels. Make it hellishly easy for an artist to register their gear and some serious work needs to be put into being able to work out how many times their songs were played and where abouts…
Michael – fantastic opinion post. If the government steps in and saves the record labels, why not just step in and save every industry that is failing due to a change in consumer behavior and technology? Heck, why don’t we have the government enforce quotas and force new business models to pay tariffs for the right to enter a space. Or even bar these smaller businesses from starting in the first place?
Atlas Shrugged, but he should have Chugged.
It’s unlikely that this would happen, it doesn’t matter that somebody feels it should. I just don’t think our government would step it up for the music industry, though I do see this as an arguement for why the Web should be taxed, along with the other industries that might be seeing decline or shift in business.
Finally technology is able to help level the playing field for even those that are underpriviledged and can barely afford to “connect” to a world of educational resource including first-rate university lectures, and other information and now you want to tax it? I don’t think so.
The funding model of the BBC ensures quality and independence.
However, having said that, there is no reason why the record companies should be funded by tax money. The music industry is in no way crucial to the well-being of society, as oppossed to banking or health care.
Open source the music business model. Musicians will thrive without music labels, not the other way around. The government has to decide whether it stands for the labels or for the music.
What ever happened to the “starving artist”? Since when have musicians been entitled to riches beyond any other job?
Their occupation is an art; its one of the few jobs that illicit emotion. They have a chance to express themselves rather than working the monotony hell of a computer desk job. What more do they want?
I love it how all you criticise big labels and say they are all worthless and “muscians will flourish by themselves”.
I find this a load of horseshit. A musician is someone who funny enough knows how to play music – not how to market, advertise, organise concerts, arrange studio timings, introduce to important gigs, package, prepare and finally get a musician into a star.
You really think “musicians will thrive without labels” – I think this is just such a wank point and really cant see a musician ever thriving without some sort of label – otherwise they would go back to smoking their pot and banging their guitar.
I agree that DRM is a wank, but not that labels are. Half the best musicians found out there today are made so famous because of the labels, sure they get their arse nailed with royalities – but its not just royalties that make a band.
Infact I would in some ways relate labels to VC’s. They take a hella risk and expand a shitload of return. You could say labels take a “40% equity parcel” in the artist and expect a big return. How different are they really from any VC firm out there?
Give the labels a break in my opinion or ask yourself this question “If you gave $500K to a company so they could advertised, market, develop, partner, paid employees etc – you would expect a massive return? How are music labels any different?”
Interesting! I wrote an article on ‘Why piracy is not that bad’..And here is an excerpt:
Companies should understand the basic reason why products are pirated?
Cost vs. Value Gap. – If the cost of a product is way too high vis-a-vis it’s perceived value, the general tendency will be to bring down the cost.
For e.g. if a premiumly priced music album has just 3 good songs while other 10 are plain mediocre, I don’t see any reason why one should pay a premium price for the album. In such cases, piracy is bound to happen.
- so either you match value with the price or bring down the price. Or sell individual songs? Or launch the album under ‘Creative Commons’ license? and find other means to make money!!
@ not so, i agree with that. few actors, musicians, etc. have the savvy side to really market, publicize and promote themselves, and there’s a lot of credibility that comes from working with a label, which opens up doors to other things.