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Thursday, February 22, 2007
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One way to judge the music industry's troubles is to watch
annual sales figures for CDs, which have slumped 25% since 2000. But it's more
revealing to chart how the major record companies' attitudes about new business models online have been shifting.
At first the shifts were almost too small to notice, as when the
labels started making a handful of downloadable songs available for $2.50 or
more. But as the file-sharing phenomenon grew and CD sales slipped, the changes
became more pronounced. The labels started offering the rights to songs on
terms that didn't cripple their online partners. They embraced Apple's iTunes
Music Store, whose anti-piracy technology doesn't actually limit copying. They
cut deals with file-sharing companies for subscription services that let users
share the songs they rented.
Along the way, though, the major labels adamantly refused to do
the kind of deal necessary to replicate what the original Napster,
Kazaa and
eDonkey had provided: they would not accept a flat fee a "blanket"
license that lets Internet service providers sell an all-you-can-eat
sonic buffet, enabling customers to download, burn and swap as much as
they pleased.
The rights would be included in the cost of a high-speed Internet
access line,
so the downloads would seem free while still generating royalties for
artists,
songwriters, labels and publishers.
That reticence may be giving way, too, thanks to the
relentless decline in revenue. Just look at what the head of the
major record companies' global trade group, let slip last month at a
music-industry gathering in France. If Internet service providers "want to come
to us and look for a blanket license for an amount per month," IFPI chief John Kennedy said, "let's
engage in that discussion."
His U.S. counterpart, Mitch Bainwol of the Recording Industry
Assn. of America (RIAA), quickly added that the licenses should be negotiated
voluntarily, not compelled by the government. So that part of the labels'
thinking hasn't changed. Nevertheless, Kennedy's remark reflects a potential
sea change in the way the record companies do business. If the labels follow
through, it could trigger the greatest explosion in innovation since engineers
at the Fraunhofer Institute in Germany developed the MP3
format.
That's a big "if," but two of the four majors have already taken
the first step. In England, a venture called PlayLouder MSP is negotiating
deals with record companies and music publishers for a competitively priced
high-speed Internet access service that will include the right to download
millions of songs, transfer them to portable devices and share them with
friends. The main restriction is that subscribers can't send songs to people
who aren't customers of PlayLouder MSP. In other words, it's a private
electronic playground for music lovers.
The company, which expects to launch its service this year, plans to put a chunk of the monthly service charges
into a royalty pool that would be divided according to popularity--the more
often a song is downloaded, the larger the share of the pool that its copyright
holders will receive. To monitor the network and enforce its borders,
PlayLouder MSP relies on technology that can identify songs as they pass
through the network--and, if necessary, block them. So far, several large
independent labels from the U.S. and the U.K. have agreed to let the company
offer MP3s of all their songs, while two of the majors, Sony BMG and EMI, have
agreed to supply songs wrapped in electronic locks. Those locks won't make much
difference, though; as part of the deal, subscribers will be free to share MP3s
from all of PlayLouder MSP's partners, including Sony BMG and EMI.
11:24:50 AM 
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LA Times: Start Blanket Licensing, Stop Blanket Lawsuits. The major record labels have stayed the course for the last five years with predictable results -- they've stuck by DRM, ratcheted up their file sharing lawsuit campaign, and let revenues continue to slide. Today, the LA Times suggests some reasons to think the labels may finally be coming around to a sensible solution that EFF has long advocated -- blanket licenses for music fans to share as much music as they like for a flat monthly fee.
"If Internet service providers 'want to come to us and look for a blanket license for an amount per month,' IFPI chief John Kennedy said, 'let's engage in that discussion....'
In the past, label executives made three main arguments against the blanket-licensing concept: it turned their companies into glorified marketing firms; it forced labels to fight over a fixed pool of dollars, so that one artist's gain was another one's loss; and there wouldn't be enough money in the pool to replace all the CD sales that would be lost. The first two complaints get little mention today; instead, the make-or-break issue for blanket-licensing deals is the amount of royalties the service can generate."
"That's the right focus. Blanket licensing wouldn't transform labels into advertising companies; the only element of their business they would lose is the part that distributes plastic discs, and that's going away anyway. When consumers can choose from a virtually unlimited supply of songs, the ability of a label to find, sign and promote the most compelling artists will be even more important than it is today. And the fees that consumers pay for downloading rights represent only a portion of the money [that blanket licensing] could generate for copyright holders. There's also money to be made from advertisers, mobile phone companies, device makers and premium music services that want to insert themselves into the network."
As we point out in our white paper about blanket licensing, even a small monthly fee from the millions of American filesharers could provide more profit than the industry has ever seen.
Unfortunately, the record labels haven't done a complete 180 from their backward-thinking ways. For instance, the labels seem eager to coopt ISPs into helping push their file sharing lawsuit campaign even further, and the AP reports that the labels have radically increased their copyright notices aimed at college students. Neither of these actions will put a dime in artists' pockets or get the labels any closer to a real solution.
The LA Times story closes by saying, "You have to wonder how low [major label revenues] have to go before blanket licenses look like a better approach than blanket lawsuits." To put it another way: how much longer do ordinary music fans and innovators have to be treated like criminals before a better way forward is finally pursued? [EFF: Deep Links]
11:19:11 AM
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'Hoax' stuns classical music world. Joyce Hatto: the greatest pianist no-one has heard of
Gramophone magazine has unearthed what one sound recording expert describes as "the biggest attempt at recording theft ever." [The Register - Music and Media]
Editor: Sounds like a perfect example of GIGO (Garbage In Garbage Out). Remember, just because it's on a computer, doesn't mean that' it is accurate.
11:01:34 AM
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© Copyright 2007 Paul Hardwick.
Last update: 3/4/07; 3:22:29 AM.
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