The Music Business and the Internet

Lots of people sent in links to stories about the music industry holding a press conference and claiming that people are copying music rather than buying it (see their press release if you like). But there are some alternative points of view too: a study at the University of Buffalo claims that music sharing may cut down on superstars and promote new music. The New Republic has a story about a band that released their album on the Net six months before CDs were available, and is now wondering whether fans will buy more, less, or about the same number of aluminum and plastic circles. And a nice chart I saw a few days ago compares CD sales vs. price over the last several years and suggests that price-fixing by the recording industry may play a part in slowing sales.

Comments

Gee, that's too bad.

[NetRanger]

You know, it's hard to have sympathy for an industry which has killed most of the real talent from getting into the popular market (with a few exceptions) ... and then it gouges the consumer with strong-arm tactics at the record stores in order to keep prices up.

For Pete's sake, CD's are still more expensive than tape cassettes. It's not about cost of manufacturing -- it's about gouging the consumer.

Any other business threatened in the same way

[GauteL]

... would have to change. So should the music industry.
They should have to become leaner and more focused on quality and price instead of just driving legislation.
I understand that the music industry wants to keep their stranglehold, where they can charge pretty much what they want.

There is a strong competition on furniture, electronics, computing etc.. so why not in this industry as well?

The whole napster/gnutella/whatever issue is just a wakeup-call from the consumers that they are sick of price-fixing and control-freakish behaviour from RIAA and their members.

Instead of just listening to the industry, legislators should let the music-sharing force the industry onto a new path.

What the consumers want is pretty clear:
1. We want to be able to buy a lot more music. Price has to go down.
2. We want more control over how we get the music and what music we want (no longer having to buy an album with 13 shitty songs, just to have 2 good ones.
3. We want a much more innovative and competive industry.

Re: Any other business threatened in the same way

[Black Parrot]

> ... would have to change. So should the music industry.

I said essentially the following about proprietary software in one of my very first posts to Slashdot:

The music industry is suffering the same phenomenon that got a certain part of the USA labeled "the Rust Belt". Technology changes; sometimes the window of economic exploitation opens, sometimes it closes. There was a time when you could become a zillionaire by covering your continent with railroads, but in much of the world that opportunity has passed, and in some places tracks are being removed. Technology makes things possible; technology makes things obsolete.

For half a century the music industry was needed by the artists: studios were expensive, pressing masses of vinyl was expensive, shipping stacks of vinyl all over the country/planet was expensive, racking it in stores was expensive. This needed middlemen with lots of money, and it was only right (IMO) that they made a profit off it.

But times have changed. A band that can afford a drum kit can afford a multi-track digital recorder; the internet can bypass the rest of the infrastructure. Bands don't need middlemen who have turned into fat cats. (At least not to get their music out; they may still need them if they want to be superstars and appear on the cover of magazines.)

As GauteL says, the music industry should be required to adapt to the changed environment. Instead, they want the USCongress to assure them their profits as an entitlement. Why should they be allowed that? What antiquated industry is it going to be next? Why should voting consumers put up with it?

This is nothing but trade protectionism, but in this case the USCongress is trying to 'protect' the US music industry from US citizens. Hey, Congress -- whose side are you on?

What I want to do with a CD I paid for...

[DocSnyder]

• Rip it to high-quality Ogg/Vorbis files for my workstation
• Rip it to small MP3 files for my PDA
• Copy it to a CDR for my car player (originals are too valuable to leave them exposed to extreme climatic conditions)
• 20 or 30 years later dig the original out of a box, listen to it and remember the time when that music popular
• Pay at most 10 € for an album, of which the artists make at least 2 €.

If the music industry can't satisfy my wishes but the file sharing networks can, what do you expect me to do?

BBC News

[larien]

On the TV this morning, they reported that:

1. Internet music sharing was rampant in the UK (probably partly attributable to increased availability of broadband) and
2. CD sales in the UK rose 4% (NB: vinyl sales rose by even more; go figure), contrary to a downward trend everywhere else

Hrm, let me see...

Unfortunately, this information didn't make it through to their web site, as far as I could see...

It's been said, but bears repeating

[Lxy]

At the time the record companies started squawking, the US was headed into a recession. Things like food, clothes, and rent became priority over Nsync CDs. As unemployement rises (look at Fingerhut!) buying CDs is a rediculous way to spend the money I don't have.

Since the dawn of Napster, it was obvious that the record companies can't stop file sharing. As bandwidth increases, CDRs get cheaper, and prerecorded CDs get more expensive, new ways of ripping and sharing files will stay far ahead of the record companies and legislation.

Another factor in slowing sales, Death of the Sing

[The Optimizer]

Another factor, I believe, in the "slowing" (read: anything less than 10% year to year growth) sales of the Music companies has been their deliberate decision to abandon the "Single" in CD format, reducing the choice a person has when they hear a single song that they like to A) Buy the entire CD at $18+ for the known 4 minutes of good music and take a chance on the rest or B) oh wait, there is no other valid 'choice' as defined by the RIAA.

I wish I had the link to a recent online news story I read which talked with the industry reps who discussed their decision to abandon Singles as they felt it was cutting into their album sales.

It seems to me that they believe that when a consumer can't get just the muisc they want a la carte, they would be willing to buy a whole lot of extra music to get it. In this situation what they should be selling is the single in downloadable and usable (read MP3) form for a small price. (Memo to Record industry: charging $7.99 for one song when there is no physical cost of goods and encoding it in a format that users can't play on their iPod/Rio/Empeg/Nomad/Archos/Etc isn't going to fool very many consumers).

I can recall back in the late '80, I used to buy a lot of "45's" .. that is 7-inch records with one song on each side (Memo to 13-year old 'l33t doods': this is where the terms "A-Side" and "B-Side" came from). In fact, I bought about 250 7-inch singles a year. At $1.99 each, I could affort to take a chance on music I wasn't 100% sure about.

In the early '90's the record companies moved to put out Singles, both 7-inch (2 songs) and 12-inch (3+ songs/Remixes) in CD format. I even bought some of those 3-inch CD-Singles in mini-longboxes (remember those).

Selection of CD singles in the USA, at least at the retail level, seemed to peak in mid '90s and has really diminished in the past 5 years.

However, this situation seems to be confined mostly to US retail. Amazon is good source for CD singles, and in Europe the format is much more popular, so ironically sources like Amazon.uk are great for getting singles to popular songs in the USA.

So this is where the availability of single song MP3 files, available for download, could be doing damage... entirely because they are filling a nitch and need that consumers have, but the labels have abandoned. A lot of those people who download probably would be good customers to buy a cheap CD single, if it was available and had the content they wanted.

Re:New Business Model Needed

[Nurlman]

The UB study just goes to underline why the RIAA is fighting so hard to prevent P2P sharing. It is well-acknowledged that the current business models of RIAA members is superstar-driven.

It's an oft-repeated fact that record labels lose money on 90% of their roster of artists, and make it all up and then some on the 10% of artists and records that become blockbusters. Thus, if P2P sharing is primarily undercutting the superstars (as the UB study states), that's the logical attack point for the RIAA.

There's no question that a new business model is needed, not just because of P2P, but because the idea of an industry where 10% of a company's products underwrite the losses on the other 90% is inherently unsound. The music industry managed to make it work for a while, but the inefficiencies and alternatives have caught up, and the RIAA is going to have to adapt or die.

Re:New Business Model Needed

[Arethan]

I have to whole heartedly agree with you on this. The US government is, and never was, charged with the responsibility to ensure that a business model that made money in the past is able to make money in the future.

If they were, we'd still see horse drawn buggies, since they auto would have been banned. It cuts into buggy sales, and we can't have that.

Or, if you want to allow products to be replaced (ie tapes were replaced by CDs, so buggies can be replaced by cars) but not allow business models that feed off of others, then I have another argument. How do you explain taxi services and forms of public transportation? You can't tell me that these don't cut into auto sales. Why have a car when you live and work in downtown Chicago? Or even take a bike.

The government endorses public transportation, but it shuns public music distribution channels? What the fuck is up with that?

All I can say, is I'm getting sick of these government officials being on the side of large businesses simply because they are large campaign contributers. I have a nice new law for you. If you accept money from a corporation or individual, you may not vote on any issues directly relating to that corporation or individual's well being. In other words, if the RIAA 'donates' $100k toward your campaign, and you accept it, you aren't allowed to vote on any bill, or push any legislation, that has to do with digital rights management, music copyright, or anything else the RIAA gets their fingers into. I guess you better stick to water purification and eco-system issues.

Damn polititians....

Re:Hypocricy in the western world

[jilles]

Don't confuse moralism, idealism and economy. You are being moralistic and confusing it with idealism. The irony is that this a simple economic problem of value adding. Any sound business model is based on adding value to something and subsequently charging for the resulting product.

Most of the cost represented by the price of 20$ for a cd is not related to the music creation process (i.e. the artist's work). Instead it is related to the production, marketing & distribution of plastic discs containing the music. Napster has 'reliefed' the record industry of these tasks so the record industry is no longer adding any value to their products. Given this reality, our capitalistic system is simply functioning properly and the only result can be that either the record company finds a new way of adding value to their product or will simply die.

The record industry has managed to slow this process by price fixing, seeking legal protection, persuading politicians to adapt the law when that didn't work, trying to persuade hardware manufacturers to adapt their products and many other tricks. However, they have so far failed to add value to their product and have even started to remove value from their products (e.g. the celine dion cd that makes your pc crash).

It's as simple as this. Because the record industry is no longer adding value they are losing market share.

Consider the invention of book printing. Before book printing, clerics would spent months or even years manually copying books. The resulting volumes were expensive. Then book printing was invented and greatly reduced the cost of creating a copy. This probably killed the market for hand copied books. Is that bad? Is that evil? No it's a simple case of no longer adding value. Just like hand copying books is no longer a good business model, creating little plastic discs with music on them has also become a waste of time.

Lies, Damned Lies, and Statistics

[knuth]

The press release from the IFPI says in part,

In the US, nearly 70% of people who downloaded music burned the songs on to a CD-R disc, while 35% of people downloading more than 20 songs per month said they now buy less music as a result.

So, in other words, 65% of the people in the U.S. who download the most music off the 'Net either:

• buy more music,
• buy the same amount as before, or
• don't know how their music buying now compares to their earlier purchases.

So overall it appears as though downloads might not be to blame for cutting into sales. One would want to know, for example, how much more and how much less these subgroups bought, and whether they were heavy music buyers before.

This is a rather clumsy blunder in a press release intended (apparently) to scare the music industry and raise sympathy for their plight among their friends in government. A minority of the heaviest users of a new technology are buying less. Hard to feel sorry for the industry.