Slashdot Mirror

securitas writes "The New York Times' Steve Lohr reports on a fundamental shift taking place in Silicon Valley in the post-dotcom era: the geeks are back in charge. New start-ups and companies that survived the bubble 'are based on innovation and are run by people with deep technical skills.' These companies have real technology and a solid technical base that have historically been the bedrock of Silicon Valley - something that was temporarily forgotten during the dotcom bubble. Profiled companies include Tellme Networks (speech recognition), InterTrust (DRM - digital rights management), VMware (virtual machines) and Scalix (Linux e-mail servers)."

Rinisari writes "Fortune.com has a story about Santa Clara-based InterTrust Technologies is claiming that their suite of 26 issued patents and 85 pending patents covers digital rights management technology currently in use by Microsoft. InterTrust is seeking an injunction barring distribution of about 85% of Microsoft's product line, including WindowsXP, OfficeXP, and Xbox. Slashdot previously mentioned InterTrust when Sony and Philips announced they were attempting to buy ( and still are attempting to buy) the DRM outfit."

Every once in a while, it's good to have someone slap you with a reminder that conflicts which look simple or clear-cut from a distance may not be quite so simple to those in the thick of the action. In this case, artist Baptist Death Ray spills his guts about the problems that widespread MP3 traffic poses to small musicians, in the context of an industry dominated by giants (and remember, not yet equipped for convenient micropayments). Meanwhile, ewhac serendipitously points out one faltering step toward the encryption which is sure to be common in the future MP3 marketplace, and perhaps has a bearing on the musicians' plight Mr. Death Ray describes.

I think that if you spoke with most musicians, you'd be surprised to find out that we hold big record labels in very low regard. Big record labels, owned by larger companies, run by stockholders, are interested in only one thing, and it ain't music. And it ain't musicians, neither. It is, quite simply, profit, and whatever they can do to maximise that profit, they'll do it. I know I'm sounding like Jon Katz here, but in truth a lot of what he says about corporatism fits the music industry perfectly. At the top are rich fat white guys churning out pablum, or thinking up new and creative ways to turn good acts into pablum, because pablum sells more records.

The problem with record labels is, quite simply, that in order to ensure that they make the kinds of money they want to make, they won't take chances. And because they happen to control all the methods of physical music distribution, they're the only game in town. When the only game in town won't take chances, that means that if you want to play, you have to play their game, and you can't take chances either.

Before the Internet, it wasn't even possible to compete against the major labels -- but in the 80s there were still plenty of minor labels willing to cater to your needs. In fact, once upon a time there was a thriving indie music scene -- there were bands able to make a living doing what they did by working with labels who didn't mind challenging music. But something happened: the big labels found out about these small labels, thought they could produce more pablum, and bought most of them out.

Meanwhile, the record industry lumbers merrily along, stepping on all the talent it can find, robbing them blind, making them sign ridiculous contracts that give up most of their rights and bleeding them dry. And a few musicians get fabulously rich in the process -- that's the carrot -- but the rest of the musicians wonder what the hell happened.

That's the problem with the record industry. And one of the biggest problems with a record label is that, despite how much they suck in general, they are phenomenally good at distribution. They know how to get the word out to record stations, they know how to put your CDs in stores, they know how to schedule you on talk shows, they know how to promote -- and they can reach a much, much larger area than you can. One of the biggest selling points a record label has is saying "our distribution network can put your CD in stores worldwide." Every musician wants his music heard worldwide, even if he tells himself he doesn't care. It's part of being a musician.

Here's the theory: the Backstreet Boys have thousands upon thousands of fans in every town they stop in. The Baptist Death Ray, on the other hand, does not. The Backstreet Boys play music that is likely to be played in every city and every town all over the world. The Baptist Death Ray, on the other hand, is a more cultivated taste. So while thousands upon thousands of people in every town might like the backstreet boys, only fifty to a hundred people in every town might like the Baptist Death Ray.

With the Internet, however, this can cease to be a problem. No longer does the Baptist Death Ray have to worry about finding 100 fans at a time. The Internet is distributed, which means among other things that although in reality all of the Baptist Death Ray fans are scattered across the globe, the perception is that they're all hanging out at the Baptist Death Ray's Web site, the Baptist Death Ray pages on Listensmart.com, Mp3.com, MusicBuilder.com, Riffage.com, and Garageband.com. In effect, the Baptist Death Ray has found a viable audience for his music over the Internet that he could not necessarily find via geography.

That is what the Internet should do for independent musicians. And this, my friends, is a genuine threat to the big record labels.

So right now you have musicians like me who make some of our music freely available. We say "listen to this! This is what I sound like. If you like it, why don't you buy the CD?" Pretty simple, not sophisticated, but all new movements start out simple and unsophisticated. In time, this could grow into something the major labels can't stop, and that scares them a lot, a lot, a lot, a lot. Once upon a time MP3.com talked a lot about this, before they tried to become another music label themselves. They called it a revolution. They were right, but then they went public and stopped talking about it.

But here's the truth: to support yourself on the Internet all you need to do is sell 10,000 CDs a year at $8 a CD. If you're selling through a model like MP3.com's, you can make 40K a year -- not bad for a musician! 10,000 CDs is nothing to a major label. 10,000 CDs sold in a year means the label drops you and never talks to you again. Your album doesn't even go aluminum at 10,000 CDs.

This means that if the public could get used to buying music online, the major labels would be screwed. They're not willing to sell CDs at $8 a pop, and plenty of musicians are willing to sell them for less. That is a revolution -- a revolution where musicians are suddenly supporting themselves based on whether or not their audience likes what they do and buys their work.

Then there's Napster. Napster seems to follow the model where the plucky indie musicians put their music online and compete against the big labels toe-to-toe. The problem is, Napster doesn't compete against the record labels. Maybe the record labels don't know this, but it's true... Napster doesn't compete against the record labels, it competes against those plucky indie musicians.

It's no secret that despite the "rampant piracy" of people trading MP3s last year, the big labels sold more CDs than ever before. People tend to like buying CDs; there's a psychological difference between downloading an MP3 and going to a store and buying a CD. Consumers aren't buying music -- they're buying CDs, with cover art and liner notes and a little poster inside and a few hidden tracks and a few spoken tracks and perhaps a limited edition signed thingie wedged in between the cover art and the CD itself. The record industry makes big stars, and owning the things that a big star sells is part of the job of being a fan. Trading bootlegs is also part of the job of being a fan, but buying the posters, the CDs, the T-Shirts, all that stuff is as well. Record companies will always make lots of money from CDs, DVDs, and any other physical format that comes after.

So yes, while there may be a billion people trading Metallica songs online, Metallica's fans will still buy Metallica CDs, because to their fans, Metallica is the greatest band that has ever lived. Despite piracy, record labels will be able to make money, gobs and gobs of it. Napster doesn't compete with the major labels -- Napster promotes them, whether either side wants to admit it or not.

Who Napster does compete with, however, are the independent musicans. While independent musicians are trying to convince people that they don't need to buy from major labels, that they can buy direct (for less!) instead, Napster is showing people that they don't need to buy music at all. So on the one hand, you could buy ABCDEffigy at MP3.com, on the other hand, you could scour Napster for all the MP3s and have it anyway. After all, the Baptist Death Ray doesn't sell CDs, he sells music. CDs are freakin' expensive. Liner notes and posters and colored cds and limited edition doodads are the kind of promotional, artistic things that record labels excel at, that they use to justify jacking up the price.

Meanwhile, the consumer looks at a Web site where he or she can spend $8 for a CD, and then looks at Napster and sees the entire contents of the album online, free. Pay, or free. It's entropy, people, it all depends on what requires less energy. Right now, maybe spending the $8 is more convenient than waiting two days on a 33.3 modem. When high bandwidth lines are commonplace, however, that will no longer be the case. The worst part is not that Napster makes it easy to pirate music -- No, the worst part is the overwhelming feeling among Napster users that pirating that music is somehow morally justifiable. Most of the arguments I see say that they're not stealing from artists, they're stealing from record labels who don't pay the artists enough anyway. Well, I have news for you, the artists, even if they don't get the amount that they deserve, still get something with every music sale.

So how does the artist make money? Well, the common response from the free music movement is "touring." But you all need to know about touring. Touring is not a good way to make money unless you have a core audience of a certain size. A "core audience" is an audience that of fans who love your stuff, and will go out of their way to see you play. Now, go back to the top of this article and read the bit about the geographical limitations the Baptist Death Ray has, versus the geogrpahical limitations the Backstreet Boys do not have.

Ideologically speaking, the people who defend Napster may very well be on stronger ground than I am. Perhaps copyright and intellectual property has run its course. Perhaps its abuses call for the complete and absolute revocation of any claim that any artist has to his or her work. Perhaps pirating music through Napster is the just the kind of direct action that we need in order to show the labels who, in fact, is boss.

What I see, however, is the death of a revolution before it even had the chance to get off the ground. I feel that even if Napster loses its court case, it's too late to stop the way things are going. Napster and its supports will, one way or another, win. However, the result of that victory will be that artists will depend more than ever on rich sponsors, which is all that a record label really is. You thought mainstream music sucked now? Wait a few years after you've won. It'll suck worse.

Signed,

The Baptist Death Ray
(bdr@baptistdeathray.com)

And in related news, ewhac writes: "CNet reported about a week ago that AOL has announced it will incorporate copy-protection measures into an upcoming release of WinAmp, the hugely popular music player (upon which XMMS is modeled). The copy protection technology, intended to deter music "piracy," is to be provided by InterTrust Technologies, and is also intended to be part of the upcoming AOL 6.0 release. WinAmp was developed by NullSoft, which was acquired by AOL a little over a year ago for about $100 million in stock.

Personal Observation: May we now conclude that AOL is no longer a customer-driven company? Because I can't imagine a single user actually asking, "Please take away my ability to share stuff with my friends." Sounds like it may be time for a Windows port of XMMS ..."