Time to Face the Music

Posted by Seth Kramer on Tuesday, October 23rd 2007 at 3:20pm



The past few weeks there have been a variety of stories about the music industry, and I'd like to take a few of them apart and discuss what I believe to be the root cause of the problems of this industry.

Jammie Thomas
In case you didn't see the story about the 30-year old single mother fined $222,000 here's a quick recap. Jammie had at least 24 songs. Jammie shared that music. Capitol records found out. Capitol sued Jammie. Jury says Jammie is guilty. Jury says she owes Capitol records $222,000.

Jammie probably stole this music. In fact I'd bet--Oh, I dunno, $222,000 on it. But she was not convicted of that. She was convicted of sharing her music. What she did was wrong. Artists and--as much as I hate to admit it--labels deserve to be compensated for their product. These songs are worth about 99 cents according to iTunes. Instead she must pay almost 1 million percent their actual value. Imagine if I had stolen a candy bar worth a dollar from the convenience store and my punishment was $1,000,000.00 restitution. Are you out of your mind?!

More to Come
The RIAA, the music industry's lobbyist organization, has filed more that 20,000 legal actions and sent thousands of pre-litigation letters to students, colleges and universities, businesses, individuals, and even children. We're going to see a lot more of this sort of thing. Legal bullying, threats, offers of settlement that seem like extortion, and to what end?

Let me be clear, the RIAA is 100% within it's rights to do all of this. They are doing nothing legally wrong, but just as Bull Connor wasn't breaking any laws by using police dogs and firehoses to enforce the segregation laws he did his cause a huge disservice. Average Americans were horrified to see such brutality. Likewise the RIAA wins no friends by prosecuting so ruthlessly and zealously that they forget how despicable they look deposing a 10-year-old girl, mistakenly accusing a 66-year-old woman of sharing gangsta rap, filing suit against an 83-year-old dead woman, one family that doesn't even own a computer, suing a woman suffering from the debilitating effects of multiple sclerosis (hint: MS is exacerbated by stress), and last but certainly not least insisting on depositions by a grieving family in order to collect from the deceased man's estate.

To what end?
The RIAA seems to be the little Dutch boy desperate to stop up the dyke, only they're failing, badly. Despite their insistence to sue anything that moves file sharing is up. 900,000 more households are sharing music than were in 2003. How has this helped the sale of music? CD sales are down 20% from 2006 (source: WSJ). So what's really going on?

The Root of the Problem
In the 90s everybody was pirating music and it was a beautiful time. And guess what, CD sales were up then. So what's the deal? The problem is that there was a massive change to the music industry in the 90s, the digital music revolution. Suddenly there was this great instrument for delivering high quality music in an instant, but the record labels only saw trouble. "Oh no, they'll steal our music", they said stroking their black mustaches. "We must stop it at all costs." So they sued Napster. And then there was Grokster. So they sued it and then there was Kazaa, and BearShare, and Blubster, and Music City, and eDonkey, and iMesh, and WinMX, and Morpheus, and AudioGalaxy, and Limewire, and...

Just a thought, if Wal-Mart discovered some magic rickshaw that allowed them to deliver their products directly from China to your door for practically free--and so fast the lead paint would barely be dry--do you think they'd take advantage of it? Of course they would. Okay no more China jokes. Anyway, they'd be on that like white on r--uh, milk.

And so it was the music industry avoided it like the plague while they developed their strategy to sell music online. Their first problem was that CDs have a lot of filler crap on them. Think anything that wasn't "No Rain" on Blind Melon's album. You know what, come to think of it, just think of Blind Melon. If they allowed people to buy individual songs how would they sell all this other crap?

Then they had to make sure once people bought this music they couldn't take advantage of the same technology that distributed it to give it to others without them sharing it. So they invented copy protection. Rules that you can't play it on more than one system, or you couldn't play it in anything but their player, or you couldn't play it more than 3 times a day, or--you get the idea. Well what did this do? It pissed off the people who were doing what they were supposed to do and paying for their music. It never hurt the pirates because they would just come up with new ways to steal the music, because these were the guys who recognized the value of the technology in the first place. So they were also more tech saavy than the average user. As a result the hardcore pirate, who had no intention of ever buying the album in the first place, fed the casual pirate who just wanted to play his music his way and not have to jump through the annoying record company hoops, and a generation of stolen music was born.

By the time Apple entered the online music market there was an relatively established price of $0.99 per song. Apple became the behemoth of online music, negotiating alliances with each major label to sell music online for them. Apple recognized the market that had existed for years (arguably about 10 years late) and filled a major void.

(Most) People pirate for a reason
Copy protection remains a big problem. It makes the user experience suck and inherently treats the customer like a thief. Pricing is a minor issue, but most people recognize that a Beach Boys song from the 60s and the latest single from Kanye West can command different prices in a competitive market, and sooner or later the labels are going to have to recognize that. Quality of music store downloads often varies significantly. Many online music stores have failed to implement a easy and workable means of "try it before you buy it". And last but not least some labels, or artists refuse to become a part of the 21st century, insisting their music will not be put online, as if they had any realistic choice in the matter. And so for these reasons many steal their music. The remaining few probably had no intention of buying it in the first place.

A New Hope
There is hope. Recent weeks have seen the introduction of a music store at Amazon.com selling high quality, 89 cent, copy protection free, with an adequatish preview, and a pretty wide selection of music including EMI and Universal artists. Apple's chairman Steve Jobs announced that EMI and several independent labels would allow them to sell music without copy protection at the same cost as the regular ones. FYI, EMI's sales are up 350%. The labels seem to be learning that the technology wasn't destroying their business, their failure to embrace it was.

Now if we could only convince the artists they will actually make money this way. Oh yeah, Radiohead announced they're putting their album online and allowing people to download it for whatever price they're willing to pay. Turns out it's about $5-8 Maybe the Beatles' song catalogue rights holders are listening, and one day they'll be online (legally I mean). You say you want a revolution?

I'm spinning Levi Kreis - Hardly The Hero
My new music store: Amazonmp3