Research: File Traders And Music Purchasing

An anonymous reader writes: "Like a TV preacher taking excerpts from the Bible to support a contrary thought, the results of research can be similarly interpreted in opposite ways. Edison Research just released a pro-record industry report stating '10.1% of 12-17s are actively downloading/not purchasing music.' Richard Menta over at MP3 Newswire noted that this also means 90% of file traders are buying music, a positive result that supports the virtues of trading. Menta then goes through the study's findings one-by-one, questioning Edison Research's conclusions. This includes their recommendation to the industry to fight the 'downloading problem.'"

Comments

It's a broken business model

[spongebob]

The interesting thing that came up in a conversation the other day was that there is an entire generation of people who are growing up not paying for music.

I come from a generation that has been totally used to paying for things. For me there is a "guilt" syndrome about knowing that the music is made with profit in mind. So I am more willing to make purchases or delete .mp3s

How do you stay in business when no one sees a direct reason to pay you for the information they can readily get for free? It's a broken business model for sure and they are really fighting to stay alive in more ways than the average guy realizes.... It will be interesting to see what happens.

Re:It's a broken business model

[alienmole]

These analogies miss an important point, which is that cars cost significant money to manufacture, and when someone "nicks" one, the original owner is now short one car. Neither of these things (the cost, nor the scarcity) is true of digital products. Like it or not, business models do have to take this into account - it's simple reality, not ideology.

Re:It's a broken business model

[Cody Hatch]

Actually...yes. Car showrooms are a horribly inneficient means of distributing cars. It's bad for the car companies, and bad for the consumers. It was a good idea originally because of problems both in tranporting the product to the consumer, as well as in communicating information about the product to the consumer.

Sound familar? Those same arguments are the ones used by the RIAA to justify their existence. Customers and musicians need the RIAA to make sure they know what CD to buy, and that it's on the shelf at the local store. Or so the RIAA says. :-)

Joy riding and stealing music have nothing to do with the problems either industry faces. Instead it's simply a matter of producers trying to collapse their distribution chain, both to cut costs and to allow more direct communication with the consumers. Musicians would like to know what their fans want (how many bands have released a great album, drawn the wrong conclusion about why it was popular, then released a crap album?). Car companies want to know what their customers want (nothings worse for profits than a lot full of a model nobody wants anymore). It's not just these two industries either - Dell has actually made a profit from selling desktop PC's from doing exactly the same thing.

The RIAA is a broken business model (or more accuratly, it looks like it's becoming one). The technology exists to allow them to be bypassed, and an ever increasing section of the population would like to, but the RIAA is fighting back with lobbying, legislation, courtroom battles, etc. Exactly like the car dealerships, incidentally, who have almost uniformly seen off all threats (although some car companies are making small headway in Europe, where dealership networks aren't quite as protected).

Re:It's a broken business model

[alienmole]

It sounds to me like it's pure ideology, not a 'reality.'

There are numerous real facts here that are not ideologically based:

• Stealing a physical product is not comparable to *copying* a digital product. I hardly think I need to belabor this point, but just in case, the point is that copying does not deprive anyone else of the original product.
• Physical products inevitable have a significantly higher cost of production than the cost of copying a digital product. This is a barrier to copying - not many people violate Ford's intellectual property by making copies of Tauruses.
• Humans - not just kids - will do things that they can get away with. This is a sociobiological and game theory imperative. Yes, we have evolved social constraints to avoid all sorts of behaviors agreed upon as undesirable, but most of these are in fact quite directly related to improving the survival capability of societies, individuals, and the species. It's questionable whether, in the presence of a cheap digital copying capability, the ability of Lance Bass to earn the money to fly into space by enforcing the non-copyability of his output is actually in society's overall interest.

If you consider the above three facts in combination, you find that the situation with digital media is factually different from that of physical products. In particular, it seems likely from the above that there will be less social stigma and more acceptance and support for copying of digital media than there will be for stealing of cars. At the very least, it puts price pressure on the products in question.

Business models do need to take these realities into account, and this is exactly what's leading to the current debate. No-one is debating whether it's OK to steal cars, because of the factual differences that I've outlined. Drawing a parallel between the two, as the post I originally replied to did, demonstrates a complete lack of understanding of the issues at work, or perhaps simply an attempt to confuse.

Either we adopt the ideology that intellectual property rights are wrong, and share away, or we adopt the ideology that intellectual property rights are fair

Not at all. You've set up a simplistic binary scenario with respect to intellectual property rights, treating them as equivalent to physical property rights on the one hand, and eliminating them on the other hand. There are an infinite variety of possibilities between those two extremes. You either aren't thinking very deeply about this, or have a vested interest in the current status quo.

Re:It's a broken business model

[alienmole]

Any and all 'physical property' is just the embodiment of 'intellectual property' into physical forms.

Certainly, but the question is whether the greater economic value is assigned to the intellectual "property" (an interesting and artifical ideological concept) or to the physical manifestation. Most of our markets have relied on the physical manifestation as a barrier to "copying".

When you purchase an automobile, all you are doing is 'leasing' somebody's intellectual property, in the form of the tools and know-how that transformed the raw ore into a vehicle.

You're oversimplifying - this ignores important distinctions. You obtain possession of a physical object which you are free to do with as you please, within reason. The intellectual property is secondary to the user of a physical object.

It happens to be far easier to make a facsimilie of a recording of music

It's that word "happens" that I'm saying has implications for business models, whether you like it or not.

the recording of the musical performance is really just somebody's IP forged into a recording that can be played back, the same as an automobile is somebody's IP forged into an automobile

You're the one pushing an ideology here: you've fixated on a single and specific meaning of intellectual "property" which happens to be very close to that of physical property.

I'm not arguing what's right or wrong, simply what's realistically likely to happen, given human tendencies and the facts of the situation.

Both are instances where you pay someone else to do something better than you ostensibly could.

Again, the question is how much you pay for the one-time invention of something like a car, vs. how much you pay for each manufacture of a car. You're assuming, without any basis, that the majority of the value is in the invention. I'm suggesting that the history of human valuation of each other's output does not favor your position.

Far be it for me to change your mind. But I don't have to change your mind. I can just nod approvingly when society as a whole agrees with me, and you are prohibited from acting freely on your beliefs.

I have no need or desire to copy music. I'm simply saying that in the long term, the ideology which treats intellectual "property" as having all the same rights as physical property, despite clear and obvious differences, is unlikely to survive in the marketplace. I don't doubt that in the short term, we'll get DRM and legislation crafted by people who share your views; but I'm equally certain that these measures are bound to fail.

Interesting..

[neksys]

I don't know about anybody else, but my purchasing habits have changed quite a bit as a result of having the ability to download music. I actually purchase fewer cds than I did before - not because I'm cheap, but because I now have the opportunity to listen to albums before I put my hard earned cash into them. So yes, the record industry gets less of my money from poor purchases - conversely, the bands I truly enjoy and wish to support get more money from me than they would have previously.

I like to consider my money an investment into a band I support - the more money they have to spend, the more music I get from them in the future. And just like any investment, one must have research tools on hand to ensure that your money is going to get a good return - It just so happens that in my case, its gnutella. Its not piracy - its good business. Surely the RIAA understands that.

Re:Interesting..

[Moofie]

No, you're not depriving content distributers of the revenue that they are "entitled" to: You are forcing them to provide a quality product, instead of a slickly-marketed one.

If I buy a stereo, take it home, and it sounds like ass, I can take it back. If I buy a CD, take it home, and find out the only good tracks are the two singles I heard on the radio, I'm screwed. That business model only works if the customers are forced to be ignorant (IE by limiting their exposure to a new band to the two singles that are "free" to listen to).

I don't care if it's illegal. (I happen to think that it is not) I will not pay $20 for a CD that some marketroid packed with crap because they wanted to save some "good" songs for the next disc. Not going to happen anymore, especially since I've got a superb alternative.

Precision

[plumby]

Inappropriate precision really bugs me. The figure "10.1%" suggests that their reseach is accuruate to 0.1%. There is no way that that is true. Why don't they stick with "approximately 10%"? It just suggests to me that people are trusting the conclusions far more than they have a right to given the raw data that they started with.

Let's see an up-to-date business model

[stevens]

Blockquoth the poster:

How do you stay in business when no one sees a direct reason to pay you for the information they can readily get for free?

I'm with you. I keep hearing about the "outdated business model" that the RIAA are using. Ok, I'll stipulate that, so what's a model that works?

I'd like to see someone start a label that signs artists, gets music recorded, books tours, and gives away mp3s without worrying who copies what. If there is a business model in there somewhere that takes mp3 copying and makes it remunerative, then the first guy to do it will be well rewarded.

Plus, it'll end all this bickering as the RIAA members fall over themselves to be the first to copy it.

Re:Let's see an up-to-date business model

[Rasta Prefect]

How did the Greatful Dead do it? They made money from concert tickets, t-shirt sales (Hey, that's the sweetest pie! quoth Krusty.) and probably a little from album sales. But they never really cared about concert bootlegs. Don't know how they felt about trading actual albums.

I'm not a deadhead by any stretch of the imagination, so maybe someone can explain.

Concerts are where most bands make the vast majority of their money. The only people making real money off CD's are their labels. The only reason bands need the albums at all is to raise awareness for their concerts. So if they can use the Internet to make others aware of their existence, the labels are no longer nessecary. Excellent business model, but theres no place in it for the RIAA, and hence they'll fight it every step of the way.

Re:Let's see an up-to-date business model

[alienmole]

You're asking the wrong question, with faulty assumptions: that the amount of money that can currently be generated from a very successful album is somehow a necessity. It's not. Your question is a little like asking how the buggy whip manufacturers are going to sell as many whips to car owners - not a perfect analogy by any means, but my point is that there's a discontinuous change here, and "business as usual" will have to change as a result.

One model that can work has already been mentioned by someone else: to focus more on making money from live performances, a la Grateful Dead. Not everyone gets to create something and stamp out millions of copies very cheaply, making huge profit margins on each one. The music industry is actually something of an anomaly in this respect.

Providing convenient and cheap downloadable music would also help, so that it's easier and preferable to pay a small fee to download a high-quality recording than it is to copy a crappy one. No-one has yet actually done this, the middlemen are all too busy resisting the inevitable reduction in their revenue stream.

The fact that middlement are being disintermediated doesn't mean that there's no future for the industry as a whole, just that there's no future for certain kinds of middlemen.

RIAA members won't fall all over themselves to copy whatever successful model arises, because that model will not involve them at the profitability levels they currently enjoy. However, I'd bet that consumers and artists will both find the end result more congenial, on average, with the possible exception of the likes of Maddona, Britney, and the Back Street Boys.

Re:Let's see an up-to-date business model

[DarkZero]

I'm with you. I keep hearing about the "outdated business model" that the RIAA are using. Ok, I'll stipulate that, so what's a model that works?

The problem with this question is that no one will ever accept anything as the right answer. The current situation with the RIAA is like a gasoline fuel company trying to keep their profits up when everyone has switched to electric or hydrogen cars. The market is simply gone, and the best that the company can hope to do is sustain itself by changing to a new, smaller business model that serves the few customers that prefer their product. Like or not, it has become a solid fact that people now regularly trade music between each other and burn mix CDs for their friends. From here on, the RIAA can hope to keep themselves from dying by finding a newer, smaller business model, but they cannot get back the annual profits that they once had.

I'd propose a new business model for them, but I'm one of the people that just thinks that the RIAA is doomed and that the music "industry" is bound to join the art and book "industries" as small but popular businesses that offer a good product at a sane price. I believe that the days of musicians being huge superstars and their companies making billions of dollars are reaching their end, and that that is not as bad a thing as many people think it is.

Re:Let's see an up-to-date business model

[namespan]

so what's a model that works?

There are a couple of local artists in Utah that seem to be doin' just fine for themselves. Peter Breinholt is the quintessential example.... he played a ton of shows, built up a following, produced his own records (from $3200 to $10,000 for the recordings), and sold them (at $10-$15 a pop). Since he's sold well over 10,000 copies on each of 4 almbums, he's not doing half bad. Certainly better than the musicians discussed by Steve Albini and Courtney Love. This leaves aside the 1,000-2,000+ seat venues that he consistently packs.

He testified at a field senate hearing a while back. He was pretty pro-P2P .... because he figures it's a high tech version of the same sort of word-of-mouth which won him local fame.

"So far," stated Breinholt, "my music has been a cottage industry. I paid for CDs to be made, found people to distribute them, designed covers, booked concert halls, took out ads in the paper... So I've stayed independant. That's not to say I'm anti-label...there's a lot a label could do to make my music available to more people. And if a fair deal came along, I might do it. I've just never seen a deal that would be fair to both parties." He spent some time delving into math of record deals, comparing his self-produced work (which makes $7-9 per CD sold) with that of a friend who went the label route (and makes $1 per CD sold, after all the record label's costs are covered, and doesn't own the rights to the CD anymore).

"It's a lot of work, but I like doing it. Not only that, but I think I understand my audience, and I get to be protective of them. I like being able to decide ticket prices for shows, who is goign to open for us, what the next CD will sound like, or how aggressively I'm willing to advertise," Breinholt said.

So there's your business model. Play and write like a maniac, keep the rights to your recordings so that when you sell copies, you actually see a couple of bucks.

Incidentally, Breinholt is not the only doing this. recently turned down a $250,000 recording contract because the terms sucked, but they seem to do just fine. Ryan Shupe and the Rubberband have won lots of attention at SXSW, and similarly sell out 1000+ venues on a regular basis, and have a couple of good recordings that people buy (even though they're really a jam band and mostly worth listening to live).

Re:Let's see an up-to-date business model

[alizard]

You have the usual misunderstanding of the purpose for RIAA labels trying to put MP3 downloading and Internet Radio out of business. Evidence that these act as cheap promotion for albums is abundant. The problem isn't that record labels object to cheap, the problem is that anybody can play, anyone can upload to P2P or submit a record to a Internet Radio station, the payola the RIAA labels provide for a monopoly on FM radio access suddenly becomes a lot less valuable.

You also don't quite get that sales/revenues are declining for both FM radio and major labels. Is it because of downloading? Let's take the word of the RIAA for a change since they tell us that the 90% of download users buy CDs. This tells us that people are buying, if it's good... and what they are paying for is better than 128K MP3 sound so they can hear something they like better. The MP3s that are played with the listener saying "what total shit" going into the bit-bucket and he's just saved $20. Part of the RIAA model depends on the listerer finding out that an album is crap AFTER paying $20 for it.

One can blame this the decline of sales on the recession, but I would attribute to the "mass market" fragmenting into niches which are getting small enough to limit the potential market value while simultaneously increasing the expertise required for the labels to know what they are selling, who they are selling to.

Their attempts to use traditional marketing, focus groups, polling, etc. to find the next million-record seller are an attempt to hit a target that is not only moving, but becoming illusory. Why are people turning off FM radio? Why did you? If it doesn't cater to your tastes, why bother?

However, this doesn't answer the rest of your question. The answer is drastically cheaper promotion and physical distribution making it possible for a record label to break even / profit on far fewer sales. A record label that intends to be around in 2020 needs to find a business model that doesn't depend on a significant number of their artists going consistently platinum.

The goal here is to make sure that an artist selling 10K records is a profitable and prosperous one. Since an artist who is selling 10K records a year that she is producing and selling herself is grossing about $100K a year, the question is... how can a record label add value to this product to justify an artist doing business with it?

The other point is that with the fragmenting of the mass market, a record label that depends on a few record artists going platinum to allow making a profit despite the other artists who "only" sold 5K or 10K or 20K records is going to find increasingly fewer platinum records and ultimately, will find itself in Chapter 11.

Remember, an artist who sells his own music and finds an audience of a few tens of thousands of people is better off without an RIAA label supporting him. Musicians know that the odds of signing with a label and going consistently platinum are not only comparable to winning the lottery, but if the label gives up on that person or band, that person/band is no longer able to sell his/their own music.

One piece of the puzzle is missing for a record company to make this new business model possible. The TVD (terabyte removable media in CD/DVD form factor) won't be out until next year. This would make possible a black box driven by a TVD jukebox that would allow CD-on-demand purchases at any record store which has a copy. Automated production equipment for CDs on demand already exists. It would need to be repackaged for non-geeks...

This allows full quality CDs to be purchased at any record store which has the black box and TVDs from each record label they carry. Each record label could send a TVD out weekly or monthly with every single record on the label, including the back list. Encryption could be used to allow only legitimate stores to use this to make copies. Automated record keeping can be done with the machine to tell the store who to send checks to every week.

This eliminates physical production and distribution of CDs from the label POV. This also eliminates a great deal of the financial risk with respect to signing a band, as the incremental cost of getting them into stores drops to about zero.

Promotion? Stop worrying about "anybody can play" and start supporting Internet Radio (unfortunately, outside the US) and MP3 networks. Start buying ads in music print media to tell people where the new "cool places" to find new music is. Make effective use of the Internet. Don't try to be all things to all people, find a niche and try to expand to neighboring niches. Keep overhead low and develop serious expertise in a category to allow effectively helping the artist to promote themselves. The converse of this is that musicians won't be able to

If a record label develops the expertise to pick artists and give them effective support at a low cost to the label, they don't need to worry about controlling promotional channels.

Once word gets around to musicians that XXXXXX Records knows how to market, to Internet Radio that they can pick music people actually listen to, and to the industry that they are making real money with a collection of artists who wouldn't even show up on their mid-list and haven't spent a penny on FM payola, a monopoly on FM Radio becomes a whole lot less valuable.

You wanted a new business model? While I think the technology and environment probably makes other alternative models possible... I've certainly answered your question in detail adequate for a slashdot post, anyone who wants me to work on this further can discuss my hourly consult rate with me.

This is fuel for the record industry.

[Mad Quacker]

10% is a _huge_ number to a capitalist corporation. They won't stop short of murder to get this 10% in their pockets.

This is the game of greed.

I stopped buying them

[Kizzle]

I'm 17 and I don't buy CD's anymore. Instead I download the 2 good songs from the CD. I, like most teenagers work at low paying job so money is tight. I don't want to pay $15 if the artist is only going to see 10 cents of that.

Re:I stopped buying them

[neksys]

Another possible option is to download the songs you want, or a whole cd of you so desire... then find the band's contact address and send them a bit of cash. Perhaps it'd only be symbolic, but I know for a fact that the $2.50 you send them in the mail would be substantially more than what they'd get otherwise - plus, the band might just get that "playing music for the sake of music" feeling again. It's worth a shot *shrug*

What are OUR solutions?

[dowobeha]

Before /. explodes into a massive frenzy against the recording industry and the senator from Disney, I have a question for the community:

What is OUR solution to the (perceived) crisis of "piracy" that is today's filesharing world?

Powerful lobbying interests are hell-bent on coming up with some sort of solution. We've all seen the laws being proposed to combat this and other DRM-related problems.

File-sharing may have a detrimental effect on sales. Then again, it may be helpful to sales. Either way, most file-sharing is theft - plain and simple.

I propose that if the online community can not come up with a way to deal with this issue, then the politicians and the lobbies will; and I am pretty sure that whatever they come up with will be a lot less freedom-friendly than what we'd like to see.

So moaning and complaining aside, what are our options? What can be done that is fair to artists and to consumers?

(steps off soapbox, slips on soap, lies unconcious for some time...)

Re:What are OUR solutions?

[evilquaker]

What is OUR solution to the (perceived) crisis of "piracy" that is today's filesharing world?

A three-fold strategy:

1. Cut prices in half...
2. Provide a value-add beyond just the music. Concept albums and/or albums with extensive artwork, liner notes, etc. are two ideas. Access to exclusive online content (keyed by UPC and revoked if used from more than 3 different geographic regions (just like the porn sites do)) is another.
3. Provide custom-order CDs with customer-selected tracks for $2 a song or so.

The bottom line is that you need to give people a reason to buy your content instead of downloading it.

Get it right, damnit!

[hrm]

The statement made in the article isn't what's quoted in the summary,
"10.1% of 12-17s are actively downloading/not purchasing music",
but it's rather
"10.1% of 12-17-year-olds who actively download music from the Internet did not purchase a single CD or cassette in the last 12 months"

The real statement allows the conclusion that 90% of downloaders still buy music media. The one in the slashdot summary, as too often is the case, is plain wrong.

No business model

[Mad Quacker]

Perhaps there isn't a business model to be had, that may be a better than any business model. How much money did musicians make before records that you could sell? Not much, but they did anyway, and we have a rich and diverse history of music. After the record industry got started, musicians still made almost nothing, just a few fatcats who had the money to invest anyway. With better contracts and sales of multi-million units, some artists have made a decent amount of money, but this is an infinitesimal number of all musicians. All the while some pseudo-anonymous fatcats with little talent but a large pile of cash, are making their pile larger.

The time for super-stars and immense amounts of wealth for the few may be at an end, at least for this industry. I welcome it. How many bands that have gotten silly, filthy rich produced a good album afterwards? Exactly.

Re:No business model

[MORTAR_COMBAT!]

How many bands that have gotten silly, filthy rich produced a good album afterwards?

red hot chili peppers. californication.

dave matthews band. broken stuff.

radiohead. amnesiac.

okay, that's all i can think of for now. but i'll agree there's not many. but i'll posit a different question: how many bands that have gotten silly, filthy rich produced a good album at all? you might find the same list of bands already mentioned here.

Re:No business model

[omnirealm]

How many bands that have gotten silly, filthy rich produced a good album afterwards?

That's the funny thing about our capitalistic system. The possibility of becoming a monopoly is a powerful incentive for innovation and production in the first place. However, once a monopoly actually occurs, then the system begins to fail (specifically, that which follows leaves much to be wanted).

I submit that the dream of becoming a multi-millionaire superstar (in the area of music), or the dream of producing the de-facto desktop operating system (in the case of Microsoft) gives motivation to struggle in the market and to produce. Take away the mere possibility of ``striking it big,'' and you affect the number of people that are going to try.

Maybe people just aren't buying music + suggestion

[0x0d0a]

I never bought a single CD before MP3s...I just didn't listen to music. Now, I have some MP3s that I listen to. If those MP3s went away, I'd just go back to not listening to music.

Because "10.1% of people downloading music are not buying music" does not mean that the music industry is losing sales from all those (though I'm sure it is from some).

I wonder how feasible it would be for someone like Borders (trying to compete with Amazon as a music retailer) to directly sign for tracks with artists. Then they maintain at each location a fat data pipe (if this isn't economically feasible, it will be -- small credit-check data lines are already in place and data gets cheaper and cheaper, whereas CDs stay the same). Then they have a really fancy burner or press or whatever at the location. They download losslessly compressed tracks from the Borders central server and cache them at local locations (to avoid retransferring popular tracks). Then people can simply say "I want a CD and I want track X, Y, and Z on it". The money goes directly to the artist, aside from Border's profit.

So lets see why this makes sense:

* Artist gets money, users have less incentive for piracy.
* User gets to specify what tracks they want/don't want and get better quality than they would pirating MP3s.
* The user can buy CDs more cheaply -- by eliminating the middleman, they pay maybe $3 to Borders per CD (you automate the thing, with a little Borders card reader, and there's very little per unit cost) and 10 cents to the artist per track (hell of a lot more than the artists are currently making), and you get a full-quality CD where you're supporting the artist for $5 tops.
* Users would have a much broader selection, not limited to the few hundred titles that might be in the store.
* Borders makes money -- I suspect unit costs after amortization would be about 50 cents per CD, so they get a healthy $2.50 in profit per CD, which is probably more than they currently make.
* Borders risks far less than they currently do -- adding an artist to their central database is cheap cheap cheap. They don't have to risk warehousing and blowing shelf space on CDs that people don't want.
* New artists can break into the market easily -- they simply register with Borders, send in their music to the main server, and start getting money. They don't have to convince much of anyone of their music quality, since there's no massive production/warehousing costs for all the CDs.

There are two drawbacks. One, you don't get extras in the CD. You might be able to print out the cover and the CD label, if this "Borders mini-CD maker" machine was fairly capable, but you might not get other stuff jammed in the case. Second, even with a hefty local cache, Borders still has to transfer 300MB per full CD (assuming lossless compression averaging 2:1) for infrequently requested CDs. This may not yet be feasible -- however, data lines keep getting cheaper, and CD prices stay the same.

Finally, a $100 80GB HD can store about 160 fairly full CDs, and 300 with lossless 2:1 compression. That's a one-time cost -- like incredibly cheaply expandable floor space. At those prices, Borders can afford to have enormous local caches -- one sale of a CD much more than makes back the cost of storing that CD locally.

Lower the price

[Anonymous Coward]

Some young person earning $5 per hour at MickeyDees has to work 5 or 6 hours to earn enough after tax money to pay for a CD. That is absurd. Lower the price. A list price of $9.99 would go a long way to curbing piracy.

You know damn well that the artists are not getting much money from the sales. It's all gravy for the fat parasite executives.

Broadband makes a big difference

[Animats]

Take a look at the graphs from the study. Only 14% of dial-up model users downloaded 100 or more songs. But 41% of broadband users did. 73% of broadband users are downloading music.

Next the RIAA will want a tax on broadband connections, I suppose.

"Actively not purchasing music"

[GeekDork]

Yow! That's active passive resistance. Ghandi would have been so proud.

But here we go again, the same old crap we have seen with other research and - especially - with benchmarks. Some company, club or whatnot buys a researcher to bend statsitics their way and hopes that no one really notices that they're just reading a modified excerpt from How to lie with Statistics/Charts. And most of the time it works, because most of the really important folks (legislators) exceeded their level of competence when they were elected (you know who you are). They get those really biased statistics on glossy paper with lots of really biased charts, have a look at it and say: "Man, those [insert enemy here]s are really bad and should be [put against the wall|fried|gassed|drowned|beat to teath|stoned]." (Personally, I'd prefer the last one afther ther Berkeley definition.)

Then, it all ends. Why? Because any counterargument comes on standard paper, printed all in black with perhaps one or two graphs meant for people who know what they're looking at, and not for decisionmakers!

In the end, we can all just sing and hope that the revolution's coming and we get to decide who's to be put against the wall. Or at least who's to rethink their corporate policies to avoit a smack-bottom.

Re:Spin

[foonf]

The RIAA will interpret this as 1/5 of the population of America will never buy CDs and they're losing out. HOWEVER, this could simply be the large (and growing) faction of Americans who are discovering independant artists via the net and downloading music free legally. They then support the artist through T-shirts and concerts.

Dear me. You can't actually believe this can you? Have you ever looked at the majority of what is available for download on peer-to-peer systems?

"actively not purchasing music"

[Dr. Awktagon]

Ah, such beautiful doublespeak. Would you like to hear the sad tale about the twenty-something who is actively not purchasing a new Lexus? In fact, said twentysomething actively doesn't purchase a new Lexus every single day of the year. Assuming a new Lexus costs $40,000, that adds up to nearly $15million per annum, which is a lot of lost revenue for the high-end car industry.

When questioned, this twentysmoething admits he feels no moral misgivings about accepting rides to work in his neighbor's Lexus without the company's express permission, and will probably continue to get free Lexus rides without paying in the foreseeable future.

Something needs to be done about this not-buying Lexus problem!

I'd buy more but they won't let me...

[sootman]

I used to buy an average of 2-4 CDs per month. Less than 1/4 was new stuff, mostly I was just fulfilling my dream of owning every song I ever liked. So, I bought a lot of Greatest Hits discs, Best of the 80s, etc. However, even before I started downloading music, I was already beginning to slow down, not because I was anywhere close to achieving my goal, but because there was less and less good stuff to buy. I won't buy a $16 80s compilation just to get 2 good songs any more than I'll buy any *new* CD just to get 2 good songs off of it. Then Napster came along and life was great-- I got a lot of good old stuff that was either difficult, impossible, or economically unfeasable to buy. Given the opportunity, I would have *happily* paid $1 for _every_single_song_, assuming it's a)in a common format (like mp3) so I'm not tied to any one player and b) mine to do with as I wish--burn to CD, keep on a file server so I can get at it from anywhere in my house, etc. I would have _preferred_ that to going the Napster route and winding up with bitrates ranging from 64 to 320, badly encoded songs, songs that have a second or two of the previous or next track on the CD, etc etc etc. If they would make it easy for me to get the music I want in a format I want, they could hook an IV to my wallet and drain money out of me at a steady rate for the rest of my life. As long as they don't, fuck'em, I'll download whatever I want. This isn't a rationalization for what I'm doing. Stealing is wrong and that's exactly what I'm doing. But like I said-- fuck'em.

BTW, listen.com and rhapsody is pretty good, but not great. AFAICT, they don't have a way to download portable tracks. In the classical area you can download 10 burnable tracks per month, but that's retarded. 1) give them to me in a format that I can use as *I* want--I'm trying to move *away* from CDs, idiots! 2) why limit me to 10/month? Let me download portable files at $1 apiece and I'll spend at *least* $25/month, right now. Probably more like $50 a month to start, then $10-$20 a few months down the road. Hell, if I didn't spend $20 a *day* for the first week or two, I'd be surprised. Remember when Napster was good and you'd get 50-150 songs in a could hours? I'd do it again in a heartbeat, and happily pay as I went along.

And if they *really* wanted to clean up, they'd ship a copy of "The Billboard Book of Top 40 Hits" to every new customer.

Re:Maybe people just aren't buying music + suggest

[handsomepete]

Overrated my ass. That's a quality suggestion. I'll bet someone from the RIAA modded it down.

Anyways, I really like the sound of that. Expanding it beyond the bookstore/coffee shop to radio station ID tags (i.e. listening to the radio if you can remember the time and station you can add it to a collection via the station's website and get radio station burnt CDs for a fee or something) is another possibility (whether it's feasible or not is another story).

I would say that your drawback regarding the extras of a CD (art, etc.) are actually incentives to purchase the actual product, not disadvantages to burning your own. That would justify a slightly higher price for the complete product. Hopefully by the time something like this could be implemented we'll have something that can alleviate those concerns about bandwidth.

Re:Hmm

[uncoveror]

"If the record labels make a concerted effort to get their artists to educate the public about how downloading takes money directly out of the artists' pockets, things may change." This quote tells it all. The recording labels view artists as a commodity they own, like slaves. They tell artists, "I made you a star, and I can take it away!" What nonsense! They view music fans as a commodity as well. Boycott the recording industry. Don't buy CDs. We, the fans decide who is and isn't a star. The RIAA and record executives are the real pirates.

Bands cannot accept cash for sales

[enota]

As much as I would love to mail some cash to my favorite band, if they are signed with a halfway intelligent label, there will be a clause in the contract forbidding them from being paid for the music they record while under contract unless it comes through the label. They will nullify their contract with the label if they accept it. yeah, it sucks, but on the bright side, you may give them a sign that a record label isn't 100 % neccessary these days. Perhaps all that is needed is a recording studio, a band, and some way for people to hear the music, ie download site, internet radio, etc.

Isn't 90% *more* than the general population?

[eschasi]

Hmmm...

What percentage of the general public buys music CDs? I bet it's significantly less than 90%. Combine that with 90% of the downloaders buying CDs, and you can make a case that downloaders are more likely to buy CDs than the general populace.

Now, admittedly that's a bogus arguement. Almost anyone who is downloading MP3s is doing so because they're a music fan, and therefore is not representative of the US as a whole. But it sure sounded good for a second, didn't it?

"There are lies, damned lies, and statistics." -- Benjamin Disraeli.

And for instructions on how to do it, see this.
--
"97.45% of all statistics are made up." - me

10% of 12-17 y.o. not buying music???

[pjt48108]

Heaven and ministers of fate defend us! When did our youth take such a sinister course in life? Where did we fail?

The record industry is obviously hoping none of us recall how, in the days of cassette tapes, those heady days of the 70s and 80s, MOST 12-17 year olds didn't pay for music. Lord knows I rarely did, if I had a friend with the tape or LP. Better yet, I'd ASK friends to dub tapes, because I lacked either the equipment or the ambition to do it myself.

Did I buy music, ever? Ohhh yes. But only if I'd had a chance to hear it on it's own merits without feeding the corporate WHORES who claimed to make it possible. That meant hearing music via non-payola avenues. If I liked what I heard, I bought it, and bought other albums by the same artists.

Unfortunately, it appears to this reporter that corporate execs are as ignorant of all-powerful 'word of mouth' today as they have always been of good talent and new and innovative approaches to music.

That is, unless it appears it could bring in lots of money for them and to PROMOTE and ADVERTISE that they, geniuses that they are, have reinvented the wheel, once again, and tht to buy anything else is evil and unpatriotic, dammit!

Grrr.

Nobody wants to hear it but...

[leabre]

If the prices of CD's were lower

If the price of a CD was $11 a CD many people in here probly would still rather download the MP3's instead of go buy it. If the price was $8.99 most people would be more likely to buy the CD but still, would be just as likely to download the song if it was convenient to do so especially if they just happened to notice to lower price CD after they spent $60 on new DVD's or something.

The arguement "if the prices of CD's were cheaper" really was true, than we'd all be buying the bargain CD's (even of popular tunes) off the shelf, but as it stands, I browse through music stores here and there and notice not too many people lining up to the the latest hit CD for the bargain of $9.99.

The same excuse is used with software. Reality is, people pirate $5 shareware just as much as they do $500 commercialware. Don't believe me? Do a search on your favorite "security related search site" and every piece of software comes up listed. Some of it is even freeware but requires you send a postcard to get a reg key and people still request serials for the software. If this excuse was really an arguement worth it's weight in gold, then there would be no serial or crack for any software less than $50 listed on any file trading network, serial 9000 archive, ASTALAVISTA, or usenet. But alas, WinZip $29 is listed, to name only one. This excuse is as much crap for music as it is software.

If the artists were being paid more

If the artists were to recieve more money and the CD's still cost $16-18 a piece, you'd still not be happy that not 50% or more is going to the artist and you'd still download music because it may still be more convenient, again, if you just spent $60 on new DVD's, $30 for a porn renewal, car payment, rent, whatever, you'd think, "I'll just download the (1) song I want". Yep, and 1 becomes 2, and then 3, and then 3000 songs are in your collection.

I may not be speaking for everyone, but lets face it, while there are those who would gladly support their favorite indy band or whatever, $16 is still $16. If you're a college student struggling and have a hard time paying $16 a CD now, how are you going to afford it if more percentage went to the artist? When was the last time you donated $x to your favorite band because you felt like they needed more money? Uh huh. That's what I thought.

I won't buy a CD because there's only 1 or 2 songs I like on the album

Yeah, and when the newest Britney Spears song appeared on a Single you were the first person to go purchase it instead of download it, right? Or I know for a fact some of you do, and not everyone who uses this excuse does. Why, because when you run a keyword search and the song pops up in the list, it's just too tempting not to download it... after all, that $2.99 for the single can buy a beer, or something, right? Or it all adds up if they happen to have to 30 favorite singles you like for sale, you'll spend $2.99 x 30 for all of them, right?

If the cost of a song was $1 to download without restrictions

For many, not all, if you can download an unrestricted song for $1 each, would you really go an download the same 3,000 songs you have in your MP3 catalog currently? Hmm... that's what I thought. If you're friend downloaded some $1 songs and happened to offer you a copy of that "unrestricted" song file, would you happily say "no, I'd rather buy it myself" or would you say "sure, here's the blank CD".

What if the songs were instead $2.50 per download, unrestricted. Lets say you have 1,500 MP3's in your collection, would you go happily replace them with legit purchased copies at $2.50? What if you have 250 MP3's, would you go spend $625 for 250 unrestricted files at $2.50 each?

What if the price was $0.25 per song but with some copy restrictions in place (only works on Windows, perhaps all OS's but only Brand X player, limited only to the purchasing PC, etc.)... would you even purchase 10 songs at 1/4 of $1?

I'm a poor college student, so I have to download them...

No you don't. If you don't have money the grocery store will not give you free groceries. The car dealer won't give you a free car. Mircosoft won't give you a free Windows. Your insurance company won't give you a free month's premium credit. Your electricity company won't keep your lights on if you don't pay the bill. The gas station won't give you a free tank of gas. So why do you feel like you need to download music (for free) if you won't do it in other aspects of life?

It's simple. If you can't afford it, wait until you can.

I will pay to support indy labels

So you'll pay $16 for your indy labels who you don't even know if they are paying the artists better or worse than the cartels, but still complaining about RIAA $16 CD's because they're too expensive and you're a starving college student who only wants to hear that 1 song, even on the indy CD? Yeah... okay...

While there's a free alternative I'll just use that instead

I actually agree with you there. You will download it for free, even if there was $1 unrestricted song per download and the cartels or indies paid more to artists. Why? Because everything is just an excuse. Because you won't pay $1 per song for all 3,000 songs in your archive (not in the same year, anyway). Because you're a starving student. Becaues it's too expensive. Because the system sucks. Because you're a deliberate copyright infringer.

I already own the CD

Good, then purchase a MP3 converting program (usually $39 or less, after all, if software was cheaper, you'd buy it, right?) then convert your song to MP3 or OGG or whatever, then you won't have to propigate statistics buy downloading them when you already own them right?

You see, when you get right down to the point, it's all just a bunch of excuses. No real substance.

Thanks, Me

Follow the money?

[cortriga]

I suspect the music stealing that's going on is not just a problem of how easy and penalty-free it is, but also a function of people feeling a little vague about where that $15.99 is going in the first place. I, personally, have this picture in my head of a fat-cat record executive standing on his penthouse balcony with a fist full of cash tossing nickles and dimes down to starving musicians clad in filthy rags groveling in the street below.

But is the distribution simply $15.89 to the exec and $0.10 to the artist? Has anyone done a comprehensive breakdown of where all the money goes? A&R, advertising, promotion, marketing, etc.? A link would be appreciated.

I'd love to see Ross Perot come on national TV with a pie-chart: "See right here? Two dollars* of every CD goes to the A&R guy. Can I finish?! Two dollars, people! That's over twelve percent!"

*DISCLAIMER: I have no idea how much money actually goes to the A&R guy.

Loaded questions too.

[moncyb]

Those questions seemed very loaded. Like the one asking if there is nothing wrong with downloading music for free. What? Why should there be anything wrong with it? Maybe if they had asked whether or not it was wrong to download music without the copyright owner's authorization. It seems the cartel's FUD is working. Half the people said it was wrong just to download music from the internet--as if there is some moral dilemma just using the network reguardless of actually committing any illegal act!

The model

[Restil]

The RIAA represents a business model that might not be necessary anymore. As many have stated many times before, the artists make their money from concerts, merchendise, and other outlets, and not so much from the sale of CDs that you buy in the music stores. Those CDs are almost completely for the expressed purpose of marketing the artist so they can make money elsewhere. CDs are the RIAA's baby.

Its possible, we simply don't need them anymore. Distribute everything in mp3 and cut out the recording industry completely. It wouldn't hurt the artists any, and it would completely eliminate the whole piracy issue. Of course, there is a chance that the RIAA DOES provide a useful service, but I find it hard to believe that artists won't be able to get coverage if the RIAA isn't around to support them. Radio will still play the good stuff, and they will actually go looking for the good stuff. People will send in good stuff for them to play. It'll happen. It can work, and the RIAA and the companies it represents simply don't need to exist.

Of course, I'm sure they have a different opinion in the matter, but times change. Industry changes. And they had a good run. But its ending. It might be in their best interests if they realize that now and change to match the way the world is going, or they're going to become the insignificant righteous.

-Restil

Re:Hmm

[NanoGator]

"If the record labels make a concerted effort to get their artists to educate the public about how downloading takes money directly out of the artists' pockets, things may change." This quote tells it all. "

Yep Yep. What bugs me about all this is that the Music Industry makes music look like it's free, then acts surprised when you find non RIAA ways of acquiring it. For example: Go to the store, buy a radio, turn it on. Result? Music. There was no registration form to fill out, no subscription to pay, not even a warning saying "FBI Warning: This music is not to be copied." What people thought they were buying when purchasing a CD was the convenience of hearing a song whenever they wanted, not a 'license'.

What would have happened if people bought FM cards for their machines and figured out how to rip MP3s off them, as opposed to CDs'? What would the argument be then?

It just bugs me that they make music seem as free as could be, then they wait until we all adopt the idea of MP3's to overreact to it. It almost makes me want to use the word 'entrapment'.

If I were a conspirist, I'd believe that the RIAA intentionally turned Napster into a justification to submit the SSSCA. I know that sounds silly, but they really could have handled this whole thing better. I mean jeez, why didn't they set up a site where you could donate money to the artists in order to make up for having MP3s you don't have the CD for?

Re:Concerts make very little money

[God! Awful]

And I don't ask anyone to work for free. If the artist doesn't want to produce music, that's fine. But the market has spoken and the market will no longer pay for the digital representation of a song. I'm part of that market and will continue to pay the current market price for sound recordings: zero.

And with that statement you debunk two arguments: yours and another of the prevailing sentiments on Slashdot. Firstly, the market has not spoken; the mob has spoken. Do you consider "the market" to be so broad as to encompass theft? I may just go out and buy me a Porche (which I have conveniently valued at $0).

Secondly, for all the people bitching about how the artists aren't being fairly compensated, the reason is that there is a huge glut of wannabe musicians out there. The labels know that if you don't want to sign away 90% of your royalties to get a contract, there are 100 other bands out there that will.

I know they won't get 260 gigs a year. I know there are expenses. There are also expenses involved in getting a 4, 6, or 8-year education for those careers that require it. And we all have to eat, too, whether at home or on the road.

We all have to eat, but most of us don't eat in restaurants every day. It's expensive (unless you want to eat complete crap). And to be a musician, you have to learn to play an instrument. I know some punk bands brag about how little they practice, but the bands I like are composed of very talented musicians. Heck, some of them even went to university to get a degree in music.

My point? Where is it written that musicians should earn a lot of money? There are a ton of jobs where the people earn peanuts. Many people can't even make ends meet, but they still go to work and do their job.

People who are good at what they do deserve a chance to make good money. You have organized it such that even a successful band will barely break even. And for the privilege of making peanuts, they have to literally live on the road. That's just crazy.

Just as there are people who love to write code and make it open source and free for everyone--and many of these projects are arguably better than those which cost $300 off the shelf--there will be musicians that will create good music (arguably better than Britney Spears) and make little or no money doing it. Heck, if you consider their time they might even lose money... just like open-source programmers.

Well I happen to think that the GPL is a communist plot and open source contributors are idealistic dupes, but at least free software advocates (mostly) don't advocate stealing proprietary software. If free music advocates simply made equally good music and allowed people to copy it that would be defensible, but consumers are greedy and they want all the best music for free. If you remember, that's all Lars Ulrich said anyway: I don't mind if bands want to allow people to share their music, but no one ever asked us if we wanted to participate.

And no, I don't think the music out there would be as good if it was impossible to make a living as a professional musician. Britney Spears would probably continue to do quite well, seeing as she is a performer and is capable of filling stadiums. The one who gets screwed is the guy who writes her songs, which is a shame because I thought some of them were quite well written.

-a