Music Tax: The iPod Approach

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1. Matthew Crist
   

   April 16th, 2008 at 8:06 am

   “Just send money directly to the artist instead.”

   I’ll second that one.

2. Mark Benson
   

   April 16th, 2008 at 8:12 am

   “It is imperative that creators and performers should benefit directly from this value.”

   Translates roughly to:

   “It is imperative that we jumnp on this opportunity to make legitimate customers suffer by snatching even more money so it doesn’t reach the artitsts.”

   What a sick joke these people are.

3. Boris
   

   April 16th, 2008 at 8:12 am

   Mike,

   I’m not disagreeing with you on this one, but;

   Do you really see NO value in record companies? Leave the sales of whatever it is to the artists themselves?

4. browse
   

   April 16th, 2008 at 8:13 am

   One thing that always bothered me about the ’send money to the artist’ approach is that there are a lot of other hands that go into making music, but then again, I listen almost exclusively to indie music anyway.

   No Congressman should be able to vote on a music tax without reading Free Culture first. The pirates of the 1900s are the good-ol-boys of the 2000s, and they are trying to keep this generation’s pirates from toppling the regime they’ve built over the last 100 years.

5. Chris McConnell
   

   April 16th, 2008 at 8:13 am

   Mike,

   I agree with you that the traditional music industry is not good for either consumers or artists, but I do think that musicians want to concentrate on being musicians and making music and not concentrate on being business people, for the most part, and as long as that is true their will be some form of company there to help out. The “music industry” needs more than a realignment, I think it needs to “start over”. The old standards are falling and only new companies with new ideas starting from the bottom will find something that works. I do not dispute that music may become predominantly “free” to consumers, but I do think that musicians need to be paid, and it is unfair to say that they should only make it through playing live shows and selling merch. The fact is that you are speaking with an “outsiders” perspective - as far as I know - you don’t play music or try to earn a living as a musician. I have conducted a number of interviews with music entrepreneurs (Tim Westergren of Pandora, Steve Purdham of We7 and Last.fm’s Felix Miller) that point out some interesting thoughts regarding your stance on recorded music eventually becoming “free”. You can find them on our blog at http://www.the5000music.com if you are interested.

6. Michael Arrington
   

   April 16th, 2008 at 8:14 am

   Boris - its a cost/benefit equation, and right now music labels are slightly less valuable to society than email spammers in my opinion.

7. Michael Arrington
   

   April 16th, 2008 at 8:15 am

   Chris - replace every instance of “musicians” in your comment with “bloggers” and you’ll see how ridiculous that sounds. No one has a right to be supported by society in my opinion, at least not anyone able bodied who can go out and work like the rest of us.

   Can you leave links to the articles you mention, in addition to the site itself?

8. Glen Campbell
   

   April 16th, 2008 at 8:24 am

   Artist? You’re saying that composers shouldn’t get paid, either?

9. Chris McConnell
   

   April 16th, 2008 at 8:25 am

   Mike - I respectfully beg to differ. Again, you seem to be approaching things from an outsiders perspective - I think you are failing to ask what is good for the artists - I have artists tell me all the time that they want to concentrate on making and playing music and not have to worry about how they are going to make a living.

   Also, comparing music and blogging is like comparing and “apples and oranges”. But, if we take your comparison of musicians/bloggers one step further, we see that bloggers would not be able to earn a living by blogging without the help of other companies such as Typepad and Wordpress (to distribute content) and sponsors and advertisers and the advertising platforms that make it possible to commercialize blogging. Maybe you could make a better living without them?

10. Barrington
    

    April 16th, 2008 at 8:26 am

    By buying live concert tickets is a start. A lot of the bands I liked in the early 90’s were awful live performers - not an accusation I would level at the majority of bands I’ve seen in the last few years. It’s subjective, sure, but I think there’s an obvious link there.

    “Unquestionably, there is a value produced by the ability to format shift.”
    My mp3-player doesn’t have that ability, though my desktop does. But they want to tax the player? Why, to ensure everyone in the UK buys their mp3 players abroad?

    Clutching at straws, much?

11. Edoardo Piccolotto
    

    April 16th, 2008 at 8:27 am

    I’m studying the problem on my master thesis… right now the only way is to edit the copyright laws…

12. Chris McConnell
    

    April 16th, 2008 at 8:27 am

    Mike - here are the links (and also, I really don’t mean any offense, just debating since I respect your insight):

    http://the5000.typepad.com/my_.....nnell.html
    http://the5000.typepad.com/my_.....eve-p.html
    http://the5000.typepad.com/my_.....o-spe.html

13. Michael Arrington
    

    April 16th, 2008 at 8:30 am

    Chris - first paragraph is just a reiteration of your previous argument. “I have artists tell me all the time that they want to concentrate on making and playing music and not have to worry about how they are going to make a living.” Sure, we’d all love that, but i don’t see why musicians deserve a special place in the welfare line.

    Your second paragraph has a flawed argument. Wordpress, our platform, is not the equivalent of a music label. They don’t charge us for the software (it’s open source) like the labels do for their services, and they don’t promote our content. A better analogy is that wordpress is like the recording equipment, and the last time I checked the microphones don’t get paid.

    WRT sponsors and advertisers, yep, that’s how we stay in business. And as long as it continues to be a viable way to make money, we’ll do it. As soon as it isn’t, I won’t go crying to you to support me.

    Remember that I’m not arguing that musicians shouldn’t make money from recorded music. I’m just arguing that they can’t.

14. Michael Arrington
    

    April 16th, 2008 at 8:31 am

    Edoardo - or shoot people who download music, which would really hurt the RIAAs public image.

15. Boris
    

    April 16th, 2008 at 8:37 am

    Mike,

    Are you arguing that a company, acting as an agent for the artist, can make no money selling the music online in downloadable format?

16. grant
    

    April 16th, 2008 at 8:38 am

    Michael. How do you address browse’s point that there are many other people involved in the production of music (sound engineers, etc), and that if you send money only to the artist you are neglecting to pay some key players in the production chain?

17. Chris Mc
    

    April 16th, 2008 at 8:38 am

    The idea of a tax to compensate for those people who rip CDs is dead in the water. CD sales are falling every year with downloads increasing at a much greater rate. I’m sure that once CD sales are negligible in sales figures that this kind of tax would still be in place, if successfully implemented.
    There is already a tax on blank CD media for music producers’ rights, regardless of a huge amount of usage not being related to music. Why are thy not targeting manufacturers of CD drives for facilitating “format shifting” or even software companies for providing the means to easily rip a CD. Here in the UK it is still actually illegal to rip a CD onto your computer, to make a back-up or, as you point out, to listen to music that you have purchased on digital players. I suggest that any new bills introduced should remove the illegality of listening to purchased content how and where one may want it.

18. nick august
    

    April 16th, 2008 at 8:39 am

    commie bastards.

19. Erik Bruchez
    

    April 16th, 2008 at 8:41 am

    In Switzerland, you now pay a tax of USD 80 per iPod (in the USD 300-400 range) to the local music mafia. It is a huge amount. It was introduced under the pretense of keeping the notion of authorized private copy alive (private copy means that you can legally share your music with family and friends).

    -Erik

20. Commie Bastard
    

    April 16th, 2008 at 8:42 am

    As a commie bastard, I’m offended. Even us commies agree with Arrington’s point on this. I’m surprised anyone can think otherwise.

21. Charbarred
    

    April 16th, 2008 at 8:48 am

    While I agree that musicians (and bloggers alike) should not expect to be supported by society, I don’t think that musicians should be expected to handle all their business affairs.

    There are many scenarios in which someone is very talented and is busy making music full time. This is where the record companies usually step in.

    I guess anyone you’d hire (or give a percentage of your profits) to make you money can be equated to email spammers.

    If I get someone to sell ad space on my blog, am I not hiring some sleazy salesman? Have you never hired a lawyer? Have you never used someone to help you sell propery?

    Business is business…

22. Chris McConnell
    

    April 16th, 2008 at 8:48 am

    Mike - I don’t mean that anyone “deserve(s) a special place in the welfare line.” All I am saying is that as long as musicians want help commercializing themselves (whatever their actual products may be) I have to believe that there are many savvy entrepreneurs out there who will step in just like in any other industry and try to fill that void.

    Again, blogging and music can’t really be compared in an identical way. Sure we can draw a few similarities or dissimilarities between the two, but really they are fundamentally different. People may or may not want their music covered in ads and sponsorships, we will see soon.

    All I am really saying is that I hope for the sake of the artists that you are wrong and that there must be some creative minds out there that can handle the shift to the digital economy in a way that is much better than how the major labels have decided to tackle things.

23. commie bastard2
    

    April 16th, 2008 at 8:51 am

    Grant@Boris- who do you think pays those people now? The artist pays for everything as the always have. It’d just be transparent under the pay the artist scheme, and the record companies wouldn’t hold sway over them as they do now.

24. Michael Arrington
    

    April 16th, 2008 at 9:06 am

    Chris, don’t start getting reasonable on me. I’ve already put you firmly in the “evil music label” camp.

25. koblas
    

    April 16th, 2008 at 9:17 am

    It’s interesting how this argument is around _music_ rather than all digital media. Think of it this way, in the near future all of these things are going to be digital:

    * Music
    * Movies
    * Newspapers
    * Books

    Probably a whole bunch more, if we don’t figure out how to backfill the tax base with the lost income from a many “luxury” purchases we’re going to be finding the basic tax rate increase to 9…10% to cover the loss income.

    It’s really just a matter of time — it’s digital goods but it’s still “goods”.

26. Jose Miguel Cansado
    

    April 16th, 2008 at 9:17 am

    Some of the greatest music in history was written well before the record labels existed: Mozart, Bach, Verdi, Puccini.

    Today’s artist can make a living out of performances, merchandising and endorsements/ads. I would love to be a hit and have my free mp3 songs known by millions of teenagers. Even if i would not get a cent from selling CDs, I can guarantee I would be millionaire only with concerts, selling t-shirts and advertising Pepsi.

    Mike, I fully agree with you. Labels are to transform or disappear. It is time to proactively help ending their Status Quo.

27. Chris McConnell
    

    April 16th, 2008 at 9:19 am

    Mike - lol. I think it’s unfair for the independent people trying to help artists make a living to get lumped into the mess created by the major labels. On the music producing side of things the ISP tax would be bad for anyone considered independent. I don’t agree with any of the actions taken by the major labels. The whole point in all of this is that there ARE people trying to do good things for artists and consumers in an industry that everyone considers “bad” these days. Companies like mine are out there trying to help worthy artists in any way that we can, in our case for a message that we believe in, not robbing them, not using them, not telling consumers “how” they must consume.

28. Paul
    

    April 16th, 2008 at 9:20 am

    I think the bigger point that’s largely being missed here is that its the Internet killing the Record Labels, not any specific symptom like piracy. It’s that the whole paradigm they stood for doesn’t make sense in a global, information-centric society.

    The Music Industry controlled who got popular. They decided which cds you’d see in the megastores, who’d get a spot on MTV, which genres they’d be producing for. In that environment they were very important. If you wanted to be a star, you needed them.

    But why should being a succesful artist require outstanding amounts of business acumen that only a 4,000 person company (Warner Music Group) can provide?

    Why shouldn’t a musician be able to just pay a recording studio to get there sound digitalized, and then sell it on Itunes? The recording can be a one on one transaction between the musician and the studio that doesn’t require any special connections.

    Why shouldn’t a musician be able to get popular just by putting out their music? Pandora, music forums, etc. When there’s limited ways to get your music out (x radio stations playing for y hours) you need to convince the gatekeepers you’re profitable for them. With the internet, though, why do we need marketing campaigns only a megacorporation can provide. Why can’t stars get popular because people listen to them, not people listen to them because they’re stars?

    And why do we need a corporation to schedule performances? Why can’t the musicians go directly to the venue and say, hey, I’ve sold a million cds, I’ve sold a million concert seats, I’ve got a ten-thousand facebook fans from the local colleges, I can fill your venue, want me to play? Honestly, I think sales numbers and references from previous venues should mean more than the fact that some music promoter hotshot is backing you.

    The Music Industry convinced us that the artists needed them, but in the long run much of the business skill needed is needed because of them. I agree that artists should concentrate on the art side and not spend 5 hours a day running the business side. But there’s no intrinsic reason art needs to be a business heavy field. I think when the Record Companies are dead and buried, to the shock of some people, music will still get made and the musicians will still get paid.

29. fernando
    

    April 16th, 2008 at 9:24 am

    @ Michael A: “So let’s hasten the go-out-of-business process as quickly as possible. Think twice before you buy any form of music. Just send money directly to the artist instead.”

    My music industry boycott begins today!

30. Jose Miguel Cansado
    

    April 16th, 2008 at 9:26 am

    In Spain there is already a tax on iPods, recordable CD/DVDs, PC hard-drives and even mobile phones. In other words, anything that can play or store music is taxed with a canon that goes to a RIAA-like organization/mafia.

    You can imagine how little songs iTunes will sell in Spain.
    Since people have already pay a tax in advance, nobody is going to pay twice by downloading from iTunes.

    Spain is one of the leading countries in file-sharing through eMule or Bittorrent. The songs/movies are paid in advance with the tax. That is, you have a flat fee to pirate all-you-can-eat. No problem, you already paid for it with the tax.

31. Rose
    

    April 16th, 2008 at 9:27 am

    I think a better comparison than “bloggers to musicians” (and more interesting) would be startups to musicians. The VCs are the record labels. How do you monetize the talent of the musician? I don’t see a music industry (now or in the future) without some sort of record label putting up the money (investing) in the hopes that the musicians (entrepreneurs) will win them a huge return on their music (product/service). I agree that they need to stop milking musicians for all they’re worth, but on the other hand, the label is taking the risk. And I also agree that the industry is broken, but that doesn’t mean they can’t find some way for all/most parties to benefit - including musician and consumer.

32. aep528
    

    April 16th, 2008 at 9:36 am

    There’s one thing that I’m surprised is almost never mentioned in the format-shifting argument - that people are not listening to multiple formats at the same time. I rip music to my mp3 player, so I can listen to it at work, while exercising, on vacation, and so on. During all that time, my CDs are sitting at home in storage. Yes, the music exists in four places at home (CD, PC, backup drive, mp3 player) but I’m obviously not listening to all four at once.

    I would not argue that musicians should not be compensated, but I don’t want them to complain about burning out by constantly performing and recording. That’s their job. As long as they keep producing, they will keep making money, the same as any other job. If a musician feels the need to take a break from the music business then they should not expect to continue getting paid.

33. person2
    

    April 16th, 2008 at 9:51 am

    @Chris - What’s wrong with artists being paid only for live shows, merchandise etc? Do you think people get don’t pay enough for those?
    Here is my issue; why is it that artists are to be treated differently from the rest of the people who earn a living by working hard?
    Why not work hard (ie. cut the middleman and become your own manager) and earn the respect & money by producing quality creations? …and sell only quality stuff, don’t bundle all your crap on a CD that contains maybe one or two creations that are worth it!
    The problem, i think, lies with their mentality - that somehow they need someone to take care of stuff while they “concentrate” on creating music! Damn, find me someone to take care of my job while I “concentrate” on stroking myself! Why is it that they feel entitled or superior? Why? Because they can play an instrument and/or sing?
    It is precisely this mentality that makes every Dick and Jane on Myspace and alike to upload stupid and ridiculous “music” and “videos” that are to be considered as “art” - hoping someday they’ll be signed by a label - instead of working hard and achieve something.
    You have to adapt to earn your income or you’ll be Darwin-ed

    p2

34. George
    

    April 16th, 2008 at 9:58 am

    I agree with aep528 - am I to understand that I’m not allowed to listen to music I bought on CD on my Zune?

    (yes, I am one of 4 people who have a Zune)

    I thought this is legal, and if not I see no reasonable argument why that hurts anyone. aep’s simultaneous use argument sums this up well.

    Musicians/labels wanting me to purchase one copy of their product is reasonable, asking me to purchase it in every format is not.

35. Andy
    

    April 16th, 2008 at 10:33 am

    Immortality and the music industry. They want vast amounts of money - forever - without really doing anything. Bloody brilliant plan. Wish I had thought of it.

36. Pandrogas
    

    April 16th, 2008 at 10:35 am

    I have no sympathy for an idustry that cannot adapt to the market, technology, and societal changes that have happened. They are clinging to an older business model and asking for everyone else to buy in so they can continue with the status quo.

    Regardless of if you think stealing the music is wrong, is it acceptable to punish all of your customers for a handful (or in this case a really big handful) of violations? When did businesses start operating like the government?

37. Hoover
    

    April 16th, 2008 at 10:36 am

    You have a great conversation going on in this post!

    I’m currently researching for a book designed to help indie-artists navigate this transition and go forward. What models will exist and flourish in the future is debatable, I believe that artists (with or without managers) should really concentrate on building a brand grass roots style and going direct to customers.

    Creative cost-effective marketing, creating a must-see live show, a focus on merchandising, aggressively pursuing licensing opportunities, working with appropriate corporate sponsors (e.g A hippie artist co-branded with an electric or hybrid car may work great for both) are ways artists can create income around their music.

    Artists were forced into being more entrepreneurial even before Napster. Since recording and marketing costs were disgustingly huge, artists had to sell several million units to see any money back (directly from recorded music) from major labels.

    It can be argued that labels created the awareness and demand that allowed artists to make money on merch and through the live show (thus the 360 deal we see now).

    The internet has leveled the playing field, created much more competition for people’s attention, but I still believe great music will find a way. Great and business savvy artists will find a way to make a prosperous career.

    That was long-winded. Hopefully it makes sense.

    Cheers,

    Hoover

    http://NewRockstarPhilosophy.com

38. Tony
    

    April 16th, 2008 at 11:38 am

    @Chris - How about this: I would love to be able to focus on writing and directing movies, without worrying about having to worry about the business end of things. Should there be someone there to help me?

    The music labels are NOT there to “help” musicians earn a living. They exist for the purpose of commercializing a product and marketing it to the masses.

    As a web programmer, I am constantly having to market myself, network, find clients, and so on. You are suggesting that musicians shouldn’t have to do that. But where does that end? What about film writers? Directors? Graphic Designers?

    If you can’t deal with the business, then you can’t make a living. That’s the way it is in other industries, why should music be any different?

    And before you accuse me of having an outside view, let me add that I have been a musician for over 35 years. I know the industry - and I can say from experience that it takes more than just talent to get to the top. It also takes -gasp- BUSINESS acumen.

    What Mike is suggesting is a change in the way musicians market themselves. Today, they have to market themselves to the labels, so they can get a recording contract, so the labels can sell them to the public. What’s wrong with eliminating the middleman and having the musician market directly to the public? That way, they get to keep more of what they earn. And they’re still doing what they’ve always had to do - marketing themselves. But now it’s directly to the consumer. Frankly, it gives the little guy a better chance to make it, with the labels out of the picture. I, for one, welcome the change.

39. RobD
    

    April 16th, 2008 at 12:20 pm

    I agree - pay the artist!

    Recently I went to a Sons and Daughters show here in Cologne. I had downloaded the CD already, and it’s a great new album (http://www.sonsanddaughtersloveyou.com), but wanted to pay them for it. Thankfully after the show some of them were selling CDs, I gave the guitarist 15 Euro and told him I’d downloaded the album. He was delighted.

    I’d like to see more artists add Paypal links to their webpages, or even allow for donations at the show (”already downloaded the music? how about giving us a few bucks for it… we accept cash and CC…”)

40. woot
    

    April 16th, 2008 at 1:18 pm

    In switzerland it’s already a reality that the customer of a portable music player has to pay taxes. The taxes go to the “suisa” which administrates swiss music rights and gives a big part of the money to the muscians. A few days a ago they lowered the taxes from 150$ to 40$ for a iPod touch 32 GB.

41. Augie
    

    April 16th, 2008 at 2:02 pm

    I’ve noted that lots of bloggers LOVE to complain about music companies but I almost never see a viable alternative offered.

    “Just send money directly to the artist instead” is simply ridiculous. It sounds good, but no one does it, amd even if we did, this act would not direct money to other people in the music food chain who contribute to a record.

    I get tired of the constant complaining and moaning from people who want to support the theft of IP. On this blog, you can sell advertising and sponsorship to support your efforts; are you suggesting songs be interrupted for advertising? (That would, in fact, be one way of making sure the artists is compensated, even if the CD is ripped and offered for free online.) Or do you have any ideas how to make music work in a world where people can buy one CD and distribute the music for free to hundred (thousands, millions) of others?

    Radiohead’s pay-what-you-want approach was interesting but completely unviable for the entire industry.

    I’m not suggesting record companies are good or even a viable business model moving forward, but NO ONE ever suggests a music distribution model that is reasonable. We talk about eliminating the middle men and going direct from musician to listener, but there’s ALWAYS a middle men unless musicians are going to learn web development, ecommerce programming, and the like. And they’d also have to become accountants and financiers, raising capital to record albums, pay for studio and production time on their own dime, with the hope of earning money back from direct sales.

    But here’s the thing that gets lost whenever I read people suggesting a world without record label middlemen: even if we eliminated the middle men and musicians started selling music directly to consumers, that still wouldn’t stop the problems of piracy! If people are going to share music freely, it won’t matter whether the music was initially stolen from a record company or a musician–the result is still the same: A decrease in the flow of cash to composers, performers, studio techs, producers, studios, instrument makers, and others who are required to produce the music that is valued (and stolen.)

    Someone please suggest a viable alternative that considers how artists and those who support artists can be compensated when their intellectual property is being stolen, and I’m all ears.

42. Beefcake
    

    April 16th, 2008 at 2:13 pm

    Digital content should be handled properly as a promotion to the publisher/artist/composer/whatever. Competing sites host and distribute songs (like ad networks host and distribute display ads) and whenever that song is downloaded (like a display ad click) the p/a/c/w running the campaign is charged a penny or something. The p/a/c/w can control the number of downloads per day or month or whatever, or the price ceiling (like display ad networks.) A successful song (display ad campaign) would cost the p/a/c/w similarly to the successful display ad publisher. Like a display ad publisher, it’s then up to the p/a/c/w to capitalize on that successful promotion and convert it into revenue.

    I find it ironic that anyone can figure out how to make money using the internet except the “creative” community.

43. NZN
    

    April 16th, 2008 at 2:14 pm

    One day we are all going to wake up and realize our minds are owned by the conglomerates that have worked to own the pathways of interconnectivity… ie the market in all its forms.

    Why was the Civil War fought?

    The winners wanted to turn the economic unit known as a plantation into the economic unit known as an employee. It is far more efficient to make your workers buy their own food, clothing and home. Thus the transition from enslavement to employment. Dont let the human rights issue confuse you.

    So now we have this global marketplace that is distributable to your hands, to your homes, to your person… wherever you might be. You are no longer bound by geographical considerations. So who owns your connection to the marketplace?

    What rights of ownership do service provides have on a globally distributed digital network?

    What rights of ownership does a baby have at the moment of birth?

    Who or what owns my identity, and more importantly, who or what gets to profit from the use of my identity in all market transactions?

    The irony of the “music problem” is that musicians have always wanted what consumers of music now want. To be valued in the transaction. Musicians and fans of music are 50-50 partners in every scenario where the value of music is translatable. Its just that the Labels have skewed the formula so much that no intelligent conversation has been able to take place between these two user groups. Hek, Napster had a chance of revolutionizing global commerce… until the lawyer stepped in to run the company into the ground.

    You want to fight for something Joe musician…? Fight for your rights to own your own identity in the marketplace from the moment of your birth. Fight to make every entity that wants to service your identity fight for the right to “service” your identity as a privately owned commodity.

    Until then… welcome to the world wide welfare system.

    Your mere participation in the socio-economic system has value. You want to create change? Stop buying tools and files that see you as a consumer only. Demand to be regarded as the owner of your marketplace. Thats when the transactional formula will begin to work as it should.

    And not one moment before.

44. NZN
    

    April 16th, 2008 at 2:18 pm

    Noted

45. Augie
    

    April 16th, 2008 at 3:26 pm

    Beefcake,

    Your idea won’t work. You assume sites can make enough money off of advertising to be able to give away music and pay a publisher/artist/composer/whatever. The pennies site operators make off of ad impressions isn’t enough to compensate the site operator and the p/a/c/w. Plus, if people continue to repost songs to P2P sites as they’re doing today, the revenue is lost just as it is today.

    BTW, it isn’t ironic at all that the “creative” community struggles with the Internet while others do not. Creative work is so much easier to steal!

    Why would someone who manufactures cars struggle with IP theft on the Internet? Even if someone stole an auto style, the thief still needs the production means to produce a physical product. But for movie makers and musicians, every person on the Internet has the means to steal and distribute their product (and many do).

    Whenever bloggers complain about record labels or the RIAA (neither of whom I think are very smart), I always ask a simple question: If someone simply cut and paste every single blog post into their own blog and earned money from advertising, would you be fine with it? Or, what every bit of your content was taken and posted somewhere without the advertising, so that people could get your wisdom and insights without all the ads around it?

    Of course, no blogger wants their content stolen in this manner, but for some reason when it comes to music, our hatred of record labels causes us to feel that this sort of IP theft is just fine.

46. NZN
    

    April 16th, 2008 at 3:32 pm

    its not theft… its a mis-appropriated business model consumated by the unwillingness of the major labels to recognize the inherent nature of digital content.

    There is a business model where mass-distribution is rewarded.

    But first consumers must be assigned the appropriate rights of ownership in order to rectify the trade imbalance.

    Who owns your citizen ID?

    You think you do?

    Hmm…

47. kort
    

    April 16th, 2008 at 3:50 pm

    Copyrights have been justified to allow time for producers to recover fair value within the limitations of physical media manufacturing/brick and mortar distribution. The intention was that works became public domain after a limited duration protected monopoly. The legacy record labels are creatures of obsolete capital intensive technology trying to hold back their replacements. The valid services they provide to artists are available at much lower costs directly as consultants and contract service providers - without the extra overhead of the record label bureaucracy. The creator gets to pay for them one way or another through “recoverable expense” deductions from their royalties. (Entertainment industry accounting departments are infamous for finding ways to turn huge profits into paper losses when calculating royalty payments.)

    The Internet is an exceptionally efficient distribution system, and social networks provide far more cost effective publicity and promotion than old style record label publicity departments. Most artists don’t receive any meaningful compensation from their retail recordings anyway - the primary benefit is the promotional effect on ticket sales to live performances.

    The Internet also offers a solution to compensating artists without requiring the legacy record labels as abusive gatekeepers. A modified form of dutch auction allows artists to be compensated directly by consumers at the time they finish creating it - without requiring an extended copyright monoply period. The auction purchases the release of certain rights to the public domain. Bidders get advanced possession and enhanced value copies of the auctioned recorded performance - and can then recoup their bid cost by selling copies of their copy - which in turn seeds the public domain distribution of their recording, transforming what is now the problem of music piracy into a valuable low cost marketing and promotion. This also allows creators to retain greater long term rights to their creations than is typical with the “all rights belong to the record label” contracts that the labels have been able to use their control of the market to demand from creators.

48. Drew Robertson
    

    April 16th, 2008 at 4:14 pm

    How is a “music tax” different than the “ESPN tax” most cable subscribers pay folded inside their basic service? If the music industry could get its act together (unlikely) and be in a position to offer a “feels like free” service, they’ll need the OK of the MSOs. But those cablecos know that this would blow the issue of a la carte pricing wide open. They will pass on this. This is a tempest in a teapot. Chill.

49. Beefcake
    

    April 16th, 2008 at 4:23 pm

    Augie, what I actually assume is that if a client can generate revenue via promotion by posting pictures or videos people don’t want to look at, doing so via songs they DO want to listen to should be a piece of cake.

    I didn’t bring up infringement (that’s the word you were looking for when you used “theft”), but for entertainment value, I’ll humor you.

    Saying car manufacturers don’t struggle with IP “on the Internet” doesn’t make sense. Of course they do. Industrial espionage is easier than ever in the electronic age.

    Your question about bloggers is even better: Find a new argument. It only works when you add an irrelevant dimension by making the statement: “If someone simply cut and paste every single blog post into their own blog…” which isn’t the case with songs. No one copies a song, puts it on their site, and claims it’s their song, and that’s not what the RIAAs of the world are complaining about. You’ve taken distribution and changed it into claiming authorship. Not the same.

    Oh, and hey Mister Pessimist Pants, stop telling other people what will or won’t work. Music has always been the tool of the marketer; I fail to see how the Internet changes that inherent fact. Adapt or die.

50. Wade
    

    April 16th, 2008 at 8:39 pm

    I like this idea better than taxing the ISPs. That’s not saying much though.

51. Augie
    

    April 16th, 2008 at 8:59 pm

    Sorry Beefcake, I just completely disagree.

    Paying for a CD, ripping it, and uploading the songs to a P2P site is EXACTLY the same as cutting and pasting every TechCrunch blog post into my own blog. I never said I’d claim authorship on a new blog–I’d just simply steal the content. This act would take Michael’s ownership rights and revenue streams away the guy who earned it.

    There is simply no defense for stealing music. I understand it happens… a lot. I also understand the music industry has been glacially slow to adopt change. Even if I accept the record labels are evil and deserve to be put out of business, it still doesn’t justify the theft of IP.

    As for corporate espionage, I think you’re making my point. I wasn’t talking about taking a mere portion of someone’s overall product, but the entire thing! Automakers certainly need to be on the lookout for corporate espionage resulting in lost trade secrets, but has there ever been a case of an entire car design being stolen and re-purposed, resulting in a loss of sales to the rightful owner of the design? The physical production of goods provides a barrier to entry. Admittedly, China isn’t helping with their mass production of pirated CDs and DVDs, but the point is still that it takes an awful lot to completely steal a physical product and offer it as your own.

    But everyone on the Internet can steal music. I’ve read all 49 comments, and I’ve not seen a single post that provides a sound business model for music distribution. As I said, even if we eliminated record labels tomorrow, musicians will still require middlemen to finance, sell, distribute, and promote their music.

    Advertising has never proven to be a financially viable revenue model to permit for access to free downloadable music. A band can certainly offer tracks or entire CDs for free to promote themselves, but there isn’t any way to turn free music into a profitable model for musicians. And if Internet users continue to share music as they have, it really won’t matter what musician’s charge or how they generate money–it’ll still not be sufficient.

    I believe that if we agree composers, musicians, producers, studio techs, and others deserve to be paid (like you and I are paid by our employers), it’s going to take more than us shaking our fists at record labels and stealing IP to make a real change. We’re going to need to develop a competitive model that prevents or otherwise discourages the kind of widespread theft that is continuing to threaten the rewards for artists.

52. Sam B
    

    April 17th, 2008 at 2:35 am

    “Just send money directly to the artist instead.”

    This is a rather cute idea, but if I did that for the last album I bought that I really liked - say, Nightwish’s ‘Dark Passion Play’ - there’s no question that although I’d much rather see the lead guitarist and main songwriter get more than the record company would give him, I’d also have to work out how much to give the other band members - and the orchestra they hired - and the choir - and the producers who turn what could have been a hideous cacophony into the beautiful album that actually got made.

    Screw it, I’ll pay my £10 and let the record company sort out the divvying (according to whatever contracts the various artists signed of their own free will). Which is kind of one of their genuine raison d’etres.

53. webbo
    

    April 17th, 2008 at 4:19 am

    I am one of the members of the UK Music Business Group who started this all off and would like to make a few points. The generalisations on this blog and responses are mind blowing and the disinformation pretty scary.
    The music industry is a huge amorphous mass and contains as well as the hated majors many many small labels, self releasing artists, songwriters and their publishers, artists, paid session musicians, music producers, studio technicians, collecting societies etc etc.
    When respondents say labels they are talking about so many different philosophies not just one. Sure some labels have not treated artists as well as they might in the past - they are big and small.

    We,as constituent parts of the music industry, seldom agree but when we do as on the payment for format shifting then music consumers should at least pay some attention to our views and not misrepresent them.
    There is already an “I-Pod” tax in 25 European countries. The proceeds are distributed in 25 different ways - some are good, some are less so but they should all be transparent and fair. And it would be better if they were the same. And they should reward the creators in all parts of the chain. We are totally aware that those parts of the chain are rapidly changing.
    We are proposing a license so that the people whose creativity effectively sells music carriers are rewarded in some way. The latter is surely not an issue?
    The radicals who proclaim that the music industry have been slow to embrace the net are often right but we are now in a situation where all music is free and yet people who manufacture devices to facilitate that are making billions of dollars from our creativity. Again is that fair?
    Sure there is some promotional value from having total distribution of free music BUT what about the non performing artists. Do they just sit in pernury and starve?
    Should Kate Bush just make one copy of her album that has taken her 7 years to make, post it on the net and watch everyone share it? Who pays the session players? And the songwriters?
    When you sit on a train or a bus and pick up a discarded newspaper that was either paid for or a free sheet funded by advertising do you enjoy reading it? Doesn’t it have a value? Doesn’t music obtained for free have a value as well?
    In many ways the whole format shifting debate is an anachronism. It is technically illegal to format shift but that has never been enforced by a copyright owner. All this does is give some of the value reflected in an I-Pod full up with shifted music back to the creators.
    In the immortal words of Peter Gabriel - “the same process that stops me earning another dollar from Sledgehammer is the process that stops a starving musician in Mali making a living”. This is far from being about the RIAA and fat cats.
    Jon Webster CEO MMF representing artists and their managers.

54. Sammy
    

    April 17th, 2008 at 4:53 am

    Only one thing to be said:

    Arrington’s support for DRM protected music makes no sense.

55. warren
    

    April 18th, 2008 at 4:20 pm

    you should cehck out http://www.shopandsave.com

    They sell online music and music players for free

56. slowblogger
    

    April 20th, 2008 at 5:39 am

    “Let’s say we harvested 10 crops. Thieves steal 9, and the 1 left is divided and distributed. And the thieves sometimes give us a lecture.” (Haechul Shin, a Korean rock musician)

    I am with Chris McConnell. A lot of free content arguments are against some of the most fundamental principles of free market economy, namely voluntary transaction and division of labor.

    When the creators made a song non-free, you may criticize they are stupid or evil (or compare them with the visionaries who distribute songs for free) but should pay to have his/her song. When your girlfriend says ‘I don’t want to have sex until we get married’, you may complain that she is old-fashioned or leave her but don’t force sex. The free society is built upon voluntary transaction.

    If musicians voluntarily seek help from others, whether they are large labels or an individual song writer, that’s called division of labor, another reason why free market society became much more affluent. You are free to call labels evil, but if they had no value the musicians would have bypassed them to begin with. I think fairer description of lables is they have an outdated business model. The musicians may not need partners as much as before, or need new kinds of them, but it is true that there are more than just performing music in music creation.

    Right now my blog seems devoted almost to countering freeconomics arguments, but most relevant for this one may be:
    - http://slowblogger.com/2008/02.....s-not.html (and the follow-up posts)
    - http://slowblogger.com/2008/03.....ll-in.html